ALLIANT ENERGY CORP (Form: 10-K, Filing Date:...

Business Address4902 NORTH BILTMORE LANEPO BOX 77007MADISON WI 53707-1007608-458-3314

Mailing Address4902 NORTH BILTMORE LANEPO BOX 77007MADISON WI 53707-1007

Business Address4902 NORTH BILTMORE LANEPO BOX 77007MADISON WI 53707-1007608-4583314

Mailing Address4902 N BILTMORE LANEPO BOX 77007MADISON WI 53707-1007

Business Address200 FIRST ST SEALLIANT ENERGY TOWERCEDAR RAPIDS IA 524013193984411

Mailing Address200 FIRST ST SEALLIANT ENERGY TOWERCEDAR RAPIDS IA 52401

SECURITIES AND EXCHANGE COMMISSION

FORM 10-KAnnual report pursuant to section 13 and 15(d)

Filing Date: 2006-03-03 | Period of Report: 2005-12-31SEC Accession No. 0000107832-06-000055

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FILERALLIANT ENERGY CORPCIK:352541| IRS No.: 391380265 | State of Incorp.:WI | Fiscal Year End: 1231Type: 10-K | Act: 34 | File No.: 001-09894 | Film No.: 06661403SIC: 4931 Electric & other services combined

WISCONSIN POWER & LIGHT COCIK:107832| IRS No.: 390714890 | State of Incorp.:WI | Fiscal Year End: 1231Type: 10-K | Act: 34 | File No.: 000-00337 | Film No.: 06661404SIC: 4931 Electric & other services combined

INTERSTATE POWER & LIGHT COCIK:52485| IRS No.: 420331370 | State of Incorp.:IA | Fiscal Year End: 1231Type: 10-K | Act: 34 | File No.: 001-04117 | Film No.: 06661405SIC: 4931 Electric & other services combined

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2005

or

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ______ to _______

Commission Name of Registrant, State of Incorporation, IRS EmployerFile Number Address of Principal Executive Offices and Telephone Number Identification Number1-9894 ALLIANT ENERGY CORPORATION 39-1380265

(a Wisconsin corporation)4902 N. Biltmore LaneMadison, Wisconsin 53718Telephone (608)458-3311

0-4117-1 INTERSTATE POWER AND LIGHT COMPANY 42-0331370(an Iowa corporation)Alliant Energy TowerCedar Rapids, Iowa 52401Telephone (319)786-4411

0-337 WISCONSIN POWER AND LIGHT COMPANY 39-0714890(a Wisconsin corporation)4902 N. Biltmore LaneMadison, Wisconsin 53718Telephone (608)458-3311

This combined Form 10-K is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power andLight Company. Information contained in the Form 10-K relating to Interstate Power and Light Company and Wisconsin Power and LightCompany is filed by such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and LightCompany makes no representation as to information relating to registrants other than itself.

Securities registered pursuant to Section 12 (b) of the Act:Name of Each Exchange

Title of Class on Which RegisteredAlliant Energy Corporation Common Stock, $0.01 Par Value New York Stock ExchangeAlliant Energy Corporation Common Stock Purchase Rights New York Stock ExchangeInterstate Power and Light Company 8.375% Series B Cumulative Preferred Stock, New York Stock Exchange

$0.01 Par ValueInterstate Power and Light Company 7.10% Series C Cumulative Preferred Stock, New York Stock Exchange

$0.01 Par ValueWisconsin Power and Light Company 4.50% Preferred Stock, No Par Value American Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: Wisconsin Power and Light Company Preferred Stock



(Accumulation without Par Value)

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.Alliant Energy Corporation - Yes x No [ ]Interstate Power and Light Company - Yes [ ] No xWisconsin Power and Light Company - Yes [ ] No x

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes o No x

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15 (d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) havebeen subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not becontained, to the best of the registrants� knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition of�accelerated filer and large accelerated filer� in Rule 12b-2 of the Exchange Act.Alliant Energy Corporation Large accelerated filer x Accelerated filer [ ] Non-accelerated filer [ ]Interstate Power and Light Company Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer xWisconsin Power and Light Company Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer x

Indicate by checkmark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2005:Alliant Energy Corporation $3.3 billionInterstate Power and Light Company $--Wisconsin Power and Light Company $--

Number of shares outstanding of each class of common stock as of Jan. 31, 2006:

Alliant Energy Corporation Common stock, $0.01 par value, 117,209,615 shares outstandingInterstate Power and Light Company Common stock, $2.50 par value, 13,370,788 shares outstanding (all of which

are owned beneficially and of record by Alliant Energy Corporation)Wisconsin Power and Light Company Common stock, $5 par value, 13,236,601 shares outstanding (all of which are

owned beneficially and of record by Alliant Energy Corporation)

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statements relating to Alliant Energy Corporation�s and Wisconsin Power and Light Company�s 2006 Annual Meetingsof Shareowners are, or will be upon filing with the Securities and Exchange Commission, incorporated by reference into Part III hereof.

TABLE OF CONTENTSPage Number

Part I Item 1. Business 1Item 1A. Risk Factors 14Item 1B. Unresolved Staff Comments 17Item 2. Properties 18



Item 3. Legal Proceedings 20Item 4. Submission of Matters to a Vote of Security Holders 20

Executive Officers of the Registrants 21Part II Item 5. Market for Registrants� Common Equity, Related Stockholder Matters and

Issuer Purchases of Equity Securities 22Item 6. Selected Financial Data 23Item 7. Management�s Discussion and Analysis of Financial Condition and

Results of Operations 25Item 7A. Quantitative and Qualitative Disclosures About Market Risk 54Item 8. Financial Statements and Supplementary Data 54Item 9. Changes in and Disagreements With Accountants on Accounting and

Financial Disclosure 134Item 9A. Controls and Procedures 134Item 9B. Other Information 134

Part III Item 10. Directors and Executive Officers of the Registrants 134Item 11. Executive Compensation 135Item 12. Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters 135Item 13. Certain Relationships and Related Transactions 135Item 14. Principal Accounting Fees and Services 135

Part IV Item 15. Exhibits, Financial Statement Schedules 136

FORWARD-LOOKING STATEMENTSRefer to �Forward-Looking Statements� in Management�s Discussion and Analysis of Financial Condition and Results of Operations (MDA)for information and disclaimers regarding forward-looking statements contained in this Annual Report on Form 10-K.

PART I

This Annual Report on Form 10-K includes information relating to Alliant Energy Corporation (Alliant Energy), Interstate Power and LightCompany (IPL) and Wisconsin Power and Light Company (WPL) (as well as Alliant Energy Resources, Inc. (Resources) and Alliant EnergyCorporate Services, Inc. (Corporate Services)). Where appropriate, information relating to a specific entity has been segregated and labeled assuch. Unless otherwise noted, the information herein has been revised to exclude discontinued operations and assets and liabilities held forsale for all periods presented. Refer to Note 16 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information.

ITEM 1. BUSINESS

A. GENERALThe primary first tier subsidiaries of Alliant Energy are: IPL, WPL, Resources and Corporate Services. Alliant Energy is operating as aninvestor-owned public utility holding company under various regulatory constraints. Alliant Energy was incorporated in Wisconsin in 1981. Abrief description of the primary first-tier subsidiaries of Alliant Energy is as follows:

1) IPL - incorporated in 1925 in Iowa as Iowa Railway and Light Corporation. IPL is a public utility engaged principally in the generation,transmission, distribution and sale of electric energy; and the purchase, distribution, transportation and sale of natural gas in selective marketsin Iowa and Minnesota, as well as the utility operations of Illinois properties that Alliant Energy is divesting. In Iowa, non-exclusivefranchises, which cover the use of streets and alleys for public utility facilities in incorporated communities, are granted for a maximum of 25years by a majority vote of local qualified residents. At Dec. 31, 2005, IPL supplied electric and gas service to 537,727 and 238,999(excluding transportation and other) customers, respectively. IPL also provides steam services to certain customers in one community in Iowaand various other energy-related products and services. In 2005, 2004 and 2003, IPL had no single customer for which electric, gas, steamand/or other sales accounted for 10% or more of IPL�s consolidated revenues.



2) WPL - incorporated in 1917 in Wisconsin as Eastern Wisconsin Electric Company. WPL is a public utility engaged principally in thegeneration, distribution and sale of electric energy; and the purchase, distribution, transportation and sale of natural gas in selective markets.Nearly all of WPL�s customers are located in south and central Wisconsin. WPL operates in municipalities pursuant to permits of indefiniteduration, which are regulated by Wisconsin law. At Dec. 31, 2005, WPL supplied electric and gas service to 452,679 and 179,289 (excludingtransportation and other) customers, respectively. WPL also provides various other energy-related products and services. In 2005, 2004 and2003, WPL had no single customer for which electric, gas and/or other sales accounted for 10% or more of WPL�s consolidated revenues.WPL Transco LLC is a wholly-owned subsidiary of WPL and holds WPL�s investment in American Transmission Company LLC (ATC).WPL also owns all of the outstanding capital stock of South Beloit Water, Gas and Electric Company (South Beloit), which was incorporatedin 1908. South Beloit is a public utility supplying electric, gas and water service, principally in Winnebago County, Illinois, and which AlliantEnergy is divesting.

3) RESOURCES - incorporated in 1988 in Wisconsin. Alliant Energy�s non-regulated investments are organized under Resources. Refer to�D. Information Relating to Non-regulated Operations� for additional details.

4) CORPORATE SERVICES - incorporated in 1997 in Iowa. Corporate Services provides administrative services to Alliant Energy and itssubsidiaries.

Refer to Note 13 of the �Notes to Consolidated Financial Statements� for further discussion of business segments, which information isincorporated herein by reference.

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B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED BASIS

1) EMPLOYEESAt Dec. 31, 2005, Alliant Energy�s consolidated subsidiaries that are included in its continuing operations had the following full- and part-time employees.

Number of Number of Percentage of EmployeesBargaining Unit Other Total Number Covered by Collective

Employees Employees of Employees Bargaining AgreementsIPL 1,292 286 1,578 82%WPL 1,358 101 1,459 93%Resources 75 617 692 11%Corporate Services -- 1,510 1,510 --

Total Alliant Energy 2,725 2,514 5,239 52%

At Dec. 31, 2005, Alliant Energy employees covered by collective bargaining agreements were as follows (IBEW=International Brotherhoodof Electrical Workers; IUOE=International Union of Operating Engineers):

Number of ContractEmployees Expiration Date

IPL:IBEW Local 1439 22 6/30/06IBEW Local 1455 7 6/30/06IBEW Local 949 257 9/30/08IBEW Local 204 (Dubuque) 120 9/30/08IBEW Local 204 (Mason City) 58 9/30/08IUOE Local 275 51 12/01/08IBEW Local 204 (Cedar Rapids) 777 8/31/10



1,292WPL - IBEW Local 965 1,358 5/31/07Resources - Various 75 Various

2,725

2) CAPITAL EXPENDITURE AND INVESTMENT PLANSRefer to �Liquidity and Capital Resources� in MDA for discussion of anticipated construction and acquisition expenditures for 2006 and2007.

3) REGULATION - Alliant Energy, IPL and WPL are subject to regulation by various federal, state, international and local agencies. Thefollowing includes the primary regulations impacting Alliant Energy�s, IPL�s and WPL�s business.

Federal Energy Regulatory Commission (FERC) and the Public Utility Holding Company Act - FERC has jurisdiction under the FederalPower Act over certain electric utility facilities and operations, wholesale rates and accounting practices of IPL and WPL, and in certain otherrespects. In addition, certain natural gas facilities and operations of IPL and WPL are subject to the jurisdiction of FERC under the NaturalGas Act. Refer to �Rates and Regulatory Matters� and �Liquidity and Capital Resources� in MDA for discussion of the Energy Policy Actthat was enacted in 2005 and the repeal of the Public Utility Holding Company Act of 1935 (PUHCA 1935).

Environmental - The United States of America (U.S.) Environmental Protection Agency (EPA) administers certain federal regulatoryprograms and has delegated the administration of other environmental regulatory programs to the applicable state environmental agencies. Ingeneral, the state agencies have jurisdiction over safety, air and water quality, and waste handling standards associated with electric powergeneration, including the level and flow of water pertaining to hydroelectric generation. In certain cases, the state environmental agencies havedelegated the administration of environmental programs to local agencies. In addition, Alliant Energy has international investments that aresubject to environmental regulations in the countries in which it operates.

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Iowa Utilities Board (IUB) - IPL is subject to regulation by the IUB for Iowa service territories for retail utility rates and standards of service,accounting requirements, approval of the location and construction of electric generating facilities having a capacity in excess of 25,000kilowatts (KW), and in other respects. Requests for rate relief are based on historical test periods, adjusted for certain known and measurablechanges occurring up to nine months from the end of the historical test year. The IUB must decide on requests for rate relief within 10 monthsof the date of the application for which relief is filed, or the interim rates granted become permanent. Interim rates can be placed in effect after10 days of the rate application filing, subject to refund, and must be based on past precedent. In 2001, the Iowa General Assembly understoodthe importance of attracting the development of electric power generating and transmission facilities within the state in sufficient quantity toensure reliable electric service to Iowa consumers and provide economic benefits to the state. Consistent with this legislative intent, Iowaenacted HF 577, which provides companies with the necessary rate making principles - and resulting, increased regulatory and investmentcertainty - prior to making certain generation investments in Iowa.

Public Service Commission of Wisconsin (PSCW) - Alliant Energy is subject to regulation by the PSCW. The PSCW regulates, amongother things, the type and amount of Alliant Energy�s investments in non-utility businesses and other affiliated interest activities. WPL is alsosubject to regulation by the PSCW for Wisconsin service territories for retail utility rates and standards of service, accounting requirements,issuance and use of proceeds of securities, approval of the location and construction of electric generating facilities, certain other additions andextensions to facilities, and in other respects. WPL is required to file rate cases with the PSCW using a forward-looking test year period. Referto �Rates and Regulatory Matters� in MDA for further discussion, including recent progressive legislation passed in Wisconsin whichprovides increased regulatory and investment certainty prior to making certain generation investments.

Minnesota Public Utilities Commission (MPUC) - IPL is subject to regulation by the MPUC for Minnesota service territories for retailutility rates and standards of service, accounting requirements, issuance and use of proceeds of securities, and in other respects. Requests forrate relief can be based on either historical or projected data and interim rates are permitted. The MPUC must reach a final decision within 10months of filing for rate relief. The MPUC also has jurisdiction to annually approve IPL�s capital structure.



Illinois Commerce Commission (ICC) - IPL and South Beloit are subject to regulation by the ICC for Illinois service territories for retailutility rates and standards of service, accounting requirements, issuance and use of proceeds of securities, certain additions and extensions tofacilities, and in other respects. Requests for rate relief must be decided within 11 months of filing.

New Zealand - Alliant Energy has an equity investment in TrustPower Ltd., a hydro and wind generation utility company, which is regulatedby the Electricity Commission (Commission). The Commission is appointed by, and reports to, the Minister of Energy. The Commission hasthe authority to recommend new regulations directly to the Minister of Energy and has the responsibility for monitoring compliance,investigating alleged breaches, and taking necessary enforcement action with respect to rules and regulations. The Commission has establishedrules governing wholesale, retail, security, transmission and distribution in the form of a multilateral contract among electricity generators,retailers, distribution companies, transmission companies and end-consumers and has contracted for reserve energy to be used in periods ofextreme energy shortages.

Refer to Notes 1(c), 1(i) and 2 of Alliant Energy�s �Notes to Consolidated Financial Statements� and �Rates and Regulatory Matters� inMDA for additional information regarding regulation and utility rate matters.

4) STRATEGIC OVERVIEWRefer to �Strategic Overview� in MDA for discussion of various strategic actions Alliant Energy has taken to strengthen its financial profileand information regarding Alliant Energy�s strategic plan.

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C. INFORMATION RELATING TO UTILITY OPERATIONSAlliant Energy realized 50%, 46%, 3% and 1% of its 2005 electric utility revenues in Iowa, Wisconsin, Minnesota and Illinois, respectively.Approximately 88% was regulated by the respective state commissions while the other 12% was regulated by FERC. Alliant Energy realized49%, 45%, 3% and 3% of its 2005 gas utility revenues in Iowa, Wisconsin, Minnesota and Illinois, respectively.

IPL realized 92%, 6% and 2% of its 2005 electric utility revenues in Iowa, Minnesota and Illinois, respectively. Approximately 94% wasregulated by the respective state commissions while the other 6% was regulated by FERC. IPL realized 93%, 5% and 2% of its 2005 gasutility revenues in Iowa, Minnesota and Illinois, respectively. WPL realized 99% of its 2005 electric utility revenues in Wisconsin and 1% inIllinois. Approximately 82% was regulated by the PSCW or the ICC while the other 18% was regulated by FERC. WPL realized 96% of its2005 gas utility revenues in Wisconsin and 4% in Illinois.

The electric energy markets in Iowa and Wisconsin continue to be regulated by the IUB and PSCW, respectively. Retail electric customers inthese markets currently do not have the ability to choose their electric supplier. However, in order to increase sales, IPL and WPL work toattract new customers into their service territories. As a result, there is competition among utilities to keep energy rates low. Although Iowaand Wisconsin electric energy markets are regulated, IPL and WPL also still face competition from other energy sources.

Federal and state regulators continue to implement policies to bring more competition to the gas industry. While the gas utility distributionfunction is expected to remain a regulated function, sales of the natural gas commodity and related services are expected to becomeincreasingly subject to competition from third parties. However, it remains uncertain if and when the current economic disincentives for smallcustomers to choose an alternative gas commodity supplier may be removed such that the utility business begins to face competition for thesale of gas to those customers.

1) ELECTRIC UTILITY OPERATIONSGeneral - IPL and WPL provide electric service in Iowa, southern and central Wisconsin, southern Minnesota and northern and northwesternIllinois. The number of electric customers and communities served at Dec. 31, 2005 was as follows:

Retail Customers Wholesale Customers Other Customers Communities ServedIPL 536,410 8 1,309 760



WPL 450,628 31 2,020 610987,038 39 3,329 1,370

Wholesale customers in the above table are billed per standardized pricing mechanisms that are detailed in tariffs approved by FERC throughwholesale rate case proceedings. In addition, IPL and WPL have bulk power customers, included in �Other customers� in the above table, thatare billed according to negotiated, long-term customer-specific contracts, which are approved by FERC on an individual basis.

2005 electric utility operations accounted for 74% and 76% of operating revenues and 96% and 84% of operating income for IPL and WPL,respectively.

Electric sales are seasonal to some extent with the annual peak normally occurring in the summer months. In 2005, the maximum peak hourdemands for IPL and WPL were 3,077 megawatts (MW) and 2,854 MW, respectively, both on Aug. 9, 2005. In 2005, the maximum peak hourdemand for Alliant Energy was 5,932 MW on Aug. 9, 2005, which was the coincident peak of the entire Alliant Energy system.

Electric Supply - Alliant Energy has met historical customer demand of electricity and expects to continue meeting future demand throughinternally generated electric supply, purchased power contracts utilizing existing firm transmission rights, and additional power purchasesfrom existing generating units located within and outside of Alliant Energy�s service territory. Refer to the �Electric Operating Information�tables for details on the sources of electric supply for Alliant Energy, IPL and WPL from 2001 to 2005. Alliant Energy�s mix of electricsupply has experienced changes as a result of the recent sales of its interests in its nuclear generating facilities and the addition of natural-gasfired generating facilities to its generation portfolio. Refer to �Strategic Overview - Utility Generation Plan� in MDA for discussion of AlliantEnergy�s utility generation plan. While Alliant Energy currently expects to meet utility customer demands in the future, unanticipatedregional or local reliability issues could still arise in the event of unexpected delays in the construction of new generating and/or transmissionfacilities, power plant outages, transmission system outages or extended periods of extremely hot weather.

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Generation - IPL and WPL own a portfolio of electric generating facilities with a diversified fuel mix including coal, natural gas andrenewable resources. Refer to Item 2. Properties for information on IPL�s and WPL�s electric generating stations.

Average Fuel Costs - The average cost of delivered fuel per million British Thermal Units used for electric generation was as follows:IPL WPL

2005 2004 2003 2005 2004 2003Coal $1.17 $1.08 $1.07 $1.32 $1.26 $1.22Natural Gas 7.86 6.65 5.88 8.49 6.65 6.82Nuclear 0.57 0.55 0.55 0.53 0.46 0.44All Fuels 1.73 1.15 1.09 1.72 1.30 1.37

Coal - Coal is the primary fuel source for Alliant Energy�s internally generated electric supply. Electric supply from coal-fired generatingfacilities represented 52%, 58% and 57% of IPL�s total sources of electric energy and 49%, 55% and 54% of WPL�s total sources of electricenergy during 2005, 2004 and 2003, respectively. Alliant Energy, through Corporate Services, IPL and WPL, has entered into contracts withdifferent suppliers to help ensure that a specified supply of coal is available at known prices for IPL and WPL for 2006 through 2010. As ofDec. 31, 2005, these contracts provide for a portfolio of coal supplies that cover approximately 95%, 74%, 49%, 21% and 7% of IPL�s andWPL�s estimated coal supply needs for 2006 through 2010, respectively. Management believes this portfolio of coal supplies represents areasonable balance between the risks of insufficient supplies and those associated with larger open positions subject to price volatility in thecoal markets. Alliant Energy expects to meet remaining coal requirements from either future contracts or purchases in the spot market.

The majority of the coal utilized by IPL and WPL is from the Wyoming Powder River Basin. A majority of this coal is transported by rail-cardirectly from Wyoming to IPL�s and WPL�s generating stations, with the remainder transported from Wyoming to the Mississippi River byrail-car and then via barges to the final destination. As protection against interruptions in coal deliveries, IPL and WPL strive to maintainaverage coal inventory supply targets of 25 to 50 days for generating stations with year-round deliveries and 30 to 150 days (depending upon



the time of year) for generating stations with seasonal deliveries. Actual averages for 2005 were 39 days for generating stations with year-round deliveries and 83 days for generating stations with seasonal deliveries. Refer to �Other Matters - Other Future Considerations - CoalDelivery Disruptions� in MDA for discussion of coal delivery disruptions caused by railroad train derailments in 2005.

Average delivered fossil fuel costs are expected to continue to increase in the future due to price structures and adjustment provisions inexisting coal contracts, rate structures and adjustment provisions in existing transportation contracts, expiration of existing transportationcontracts and recent coal market trends. Existing coal commodity contracts with terms of greater than one year have fixed future year pricesthat generally reflect recent upward market trends. A few of the existing coal contracts have provisions for price adjustments should specificindices change. Rate adjustment provisions in transportation contracts are primarily based on changes in the Rail Cost Adjustment Factor aspublished by the U.S. Surface Transportation Board. Other factors which may impact coal prices for future commitments are increasing costsfor supplier mineral rights, increasing costs to mine the coal and changes in various associated laws and regulations. For example, emissionrestrictions related to sulfur dioxide, nitrogen oxide and mercury along with other environmental limitations on generating stations continue toincrease and will likely limit the ability to obtain, and further increase the cost of, adequate coal supplies. Alliant Energy believes that, givenits current coal procurement process, the specific coal market in its primary purchase region, and regulatory cost-recovery mechanisms, it isreasonably insulated against the present volatile coal price environment. Alliant Energy�s coal procurement process stresses periodicpurchases, staggering of contract terms, stair-stepped levels of coverage going forward for five to six years and supplier diversity. Similarly,given the term lengths of its transportation agreements, Alliant Energy believes it is reasonably insulated against future higher base coaltransportation rates from the major railroads. As of Dec. 31, 2005, existing coal transportation agreements cover 100% of IPL�s and WPL�sestimated needs through 2006, approximately 91% for 2007 and 64% for 2008 through 2010. Refer to Note 1(i) for discussion of IPL�s andWPL�s rate recovery of fuel costs and Note 11(b) for details relating to coal purchase commitments in the �Notes to Consolidated FinancialStatements.�

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Natural Gas - Alliant Energy owns several natural gas-fired generating facilities that help meet customer demand for electricity especiallyduring peak hour demands. Electric supply from natural gas-fired generating facilities represented 6%, 2% and 2% of Alliant Energy�s totalsources of electric energy for its electric customers during 2005, 2004 and 2003, respectively. Increased electric supply from natural gas-firedgenerating facilities during 2005 was primarily due to generation from IPL�s 565 MW, natural gas-fired Emery Generating Facility (Emery)that was placed in service in May 2004 and Resources� 300 MW, natural gas-fired Sheboygan Falls Energy Facility (SFEF) that begancommercial operations in June 2005. WPL has exclusive rights to the output of SFEF under an affiliated lease agreement. Refer to �GasUtility Operations� for discussion of contracts for the supply and transportation of natural gas required for natural gas-fired generatingfacilities.

Nuclear - Electric supply from nuclear generating facilities represented 17%, 19% and 16% of IPL�s total sources of electric energy and 2%,11% and 11% of WPL�s total sources of electric energy during 2005, 2004 and 2003, respectively. In July 2005, WPL sold its interest in theKewaunee Nuclear Power Plant (Kewaunee) to a subsidiary of Dominion Resources, Inc. (Dominion) and upon closing of the sale entered intoa long-term purchased power agreement with Dominion to purchase energy and capacity from Kewaunee. In January 2006, IPL sold itsinterest in the Duane Arnold Energy Center (DAEC) to a subsidiary of FPL Group, Inc. (FPL) and upon closing of the sale entered into apurchased power agreement with FPL to purchase energy and capacity from DAEC. As a result of these transactions, Alliant Energy no longerhas an ownership interest in any nuclear generating facilities. Alliant Energy entered into these transactions to reduce the financial andoperational uncertainty associated with nuclear generating facility ownership and operations while still retaining the benefit of the output fromsuch nuclear generating facilities. For additional information regarding these sales refer to Notes 17 and 18 of Alliant Energy�s �Notes toConsolidated Financial Statements.�

Purchased Power - Alliant Energy enters into purchased power commitments to meet a portion of its customer demand of electricity.Purchased power represented 21%, 20% and 25% of IPL�s total sources of electric energy and 46%, 32% and 31% of WPL�s total sources ofelectric energy during 2005, 2004 and 2003, respectively. IPL�s level of purchased power during these periods was impacted by scheduledrefueling outages at DAEC in 2005 and 2003 and Emery being placed into service in May 2004. WPL�s level of purchased power duringthese periods was impacted by the sale of its interest in Kewaunee in July 2005. Refer to Notes 17 and 18 of Alliant Energy�s �Notes toConsolidated Financial Statements for additional details regarding recent purchased power agreements related to Kewaunee and DAEC,



respectively, and Notes 3(a) and 11(b) of Alliant Energy�s �Notes to Consolidated Financial Statements� for details relating to purchasedpower commitments. Refer to �Other Matters - Other Future Considerations - Calpine Bankruptcy� in MDA for discussion of WPL�spurchased power agreements with Calpine Corporation subsidiaries related to the RockGen and Riverside generating facilities.

Electric Transmission Business and Energy Markets -WPL - In 2001, WPL transferred its transmission assets to ATC in exchange for an ownership interest in ATC. As of Dec. 31, 2005, WPLheld a 21% ownership interest in ATC with a carrying value of $152 million. ATC is an independent for-profit, transmission-only companyand is a transmission-owning member of the Midwest Independent System Operator (MISO) and Reliability First Corporation RegionalReliability Council (Reliability First). Reliability First is the successor organization to the Mid-American Interconnected Network, Inc., whichceased operations Dec. 31, 2005. ATC realizes its revenues from the provision of transmission services to both participants in ATC as well asnon-participants. During 2005, ATC distributed in the form of dividends approximately 80% of its earnings to the equity holders and, althoughno assurance can be given, Alliant Energy anticipates ATC will continue this dividend payout ratio in the future. ATC is continuing its effortsto improve transmission reliability and import capabilities into Wisconsin, including construction of a 345-kilovolt transmission line, which isexpected to be in service in 2008. As these facilities are constructed, they will serve to enhance Alliant Energy�s operating flexibility and itsaccess to lower-cost energy. ATC also has various transmission interconnections with four other transmission owning utilities in the Midwest.WPL�s anticipated capital contributions to ATC in 2006 and 2007 are $12 million and $11 million, respectively.

IPL - IPL maintains and operates its own transmission assets which had a book value of $442 million as of Dec. 31, 2005. Refer to�Properties� for additional information regarding IPL�s electric transmission properties. IPL has a non-cancelable operation agreement, whichwill terminate on Dec. 31, 2035, with Central Iowa Power Cooperative (CIPCO) that provides for the joint use of certain transmissionfacilities of IPL and CIPCO. IPL has transmission interconnections at various locations with nine other transmission owning utilities in theMidwest. These interconnections, along with the interconnections of ATC, enhance the overall reliability of the Alliant Energy transmissionsystem and provide access to multiple sources of economic and emergency energy. Refer to �Strategic Overview - Transmission Business� inMDA for discussion of the options IPL is evaluating related to the future of its transmission assets.

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Regional Transmission Participation - IPL and WPL are members of the Midwest Reliability Organization and Reliability First, both ofwhich are regional members of the North American Electric Reliability Council (NERC). Each regional member of NERC is responsible forsetting policies to ensure reliability in its area through coordination of planning and operations.

MISO Wholesale Energy Market - IPL and WPL are also members of MISO, a FERC-approved Regional Transmission Organization,which is responsible for monitoring and ensuring equal access to the transmission system in its service territory. On April 1, 2005, IPL andWPL began participation in the restructured wholesale energy market operated by MISO. The implementation of this restructured marketmarked a significant change in the way IPL and WPL buy and sell wholesale electricity, obtain transmission services and schedule generation.In the restructured market, IPL and WPL offer their generation and bid their demand into the market on an hourly basis. MISO evaluatesIPL�s, WPL�s and other market participants� energy injections into, and withdrawals from, the system to economically dispatch the entireMISO system on an hourly basis. MISO settles these hourly offers and bids based on locational marginal prices, which are market-drivenvalues based on the specific time and location of the purchase and/or sale of energy. The restructured market is intended to send price signalsto stakeholders where generation or transmission system expansion is needed. This market-based approach is expected to result in loweroverall costs in areas with abundant transmission capacity. In areas of constrained transmission capacity, such as Wisconsin, costs could behigher due to the congestion and marginal loss pricing components. Refer to �Rates and Regulatory Matters� in MDA for discussion of theregulatory impacts of costs related to MISO.

As part of the MISO market restructuring, physical transmission rights of IPL and WPL were replaced with Financial Transmission Rights(FTRs). FTRs provide a hedge for congestion costs that incur in the MISO day-ahead energy market. Both IPL and WPL have been awardedFTRs by MISO that are in place during the period Sep. 1, 2005 through May 31, 2006. Based on the FTRs awarded to IPL and WPL to dateand future expected allocations, along with the regulatory recovery treatment of MISO costs, the financial impacts associated with FTRs havenot differed significantly from the financial impacts associated with physical transmission rights that existed prior to the MISO market.



Electric Environmental Matters - Alliant Energy is regulated in environmental matters by federal, state and local agencies. Such regulationsare the result of a number of environmental laws passed by the U.S. Congress, state legislatures and local governments and enforced byfederal, state and local regulatory agencies. The laws impacting Alliant Energy�s operations include, but are not limited to, the Safe DrinkingWater Act; Clean Water Act; Clean Air Act (CAA), as amended by the CAA Amendments of 1990; National Environmental Policy Act of1969; Toxic Substances Control Act; Resource Conservation and Recovery Act; Comprehensive Environmental Response, Compensation andLiability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act and Emergency Planning and Community Right-to-Know Act of 1986; Endangered Species Act; Nuclear Waste Policy Act of 1982, as amended in 1987; Occupational Safety and Health Act;National Energy Policy Act of 1992; Federal Insecticide, Fungicide and Rodenticide Act; Hazardous Materials Transportation Act; andPollution Prevention Act. Alliant Energy regularly obtains federal, state and local permits to assure compliance with the environmentalprotection laws and regulations. Costs associated with such compliance have increased in recent years and are expected to continue to increasein the future. Alliant Energy anticipates these prudently incurred costs for IPL and WPL will be recoverable through future rate caseproceedings.

Refer to �Liquidity and Capital Resources� in MDA for further discussion of electric environmental matters.

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Alliant Energy Corporation

Electric Operating Information 2005 2004 2003 2002 2001Operating Revenues (in millions):

Residential $823.4 $716.7 $684.6 $626.9 $599.1Commercial 497.4 437.8 409.7 376.4 373.1Industrial 675.2 609.9 571.6 526.8 543.5

Total from retail customers 1,996.0 1,764.4 1,665.9 1,530.1 1,515.7Sales for resale 273.3 185.8 195.8 160.3 184.5Other 51.3 58.8 55.4 62.1 56.4

Total $2,320.6 $2,009.0 $1,917.1 $1,752.5 $1,756.6

Electric Sales (000s MWh):Residential 7,881 7,354 7,565 7,616 7,344Commercial 6,110 5,702 5,663 5,542 5,464Industrial 12,830 12,596 12,345 12,297 12,469

Total from retail customers 26,821 25,652 25,573 25,455 25,277Sales for resale 6,094 5,102 5,495 4,805 4,936Other 173 178 184 197 168

Total 33,088 30,932 31,252 30,457 30,381

Customers (End of Period):Residential 849,845 839,745 830,559 822,229 807,754Commercial 134,149 131,152 129,130 128,212 125,539Industrial 3,044 2,916 2,902 2,905 2,826Other 3,368 3,312 3,362 3,344 3,324

Total 990,406 977,125 965,953 956,690 939,443



Other Selected Electric Data:Maximum peak hour demand (MW) 5,932 5,644 5,887 5,729 5,677Cooling degree days (1):

Cedar Rapids (IPL) (normal - 379) 406 139 276 397 347Madison (WPL) (normal - 242) 421 138 224 356 305

Sources of electric energy (000s MWh):Coal 17,360 18,472 18,451 17,674 18,190Purchased power (2) 10,893 8,289 9,155 8,596 8,727Nuclear (2) 3,461 5,018 4,498 5,012 4,116Gas (3) 2,052 792 631 675 472Other 297 262 240 379 452

Total 34,063 32,833 32,975 32,336 31,957

Revenue per kilowatt-hour (KWh) from retailcustomers (cents) 7.44 6.88 6.51 6.01 6.00

(1)Cooling degree days are calculated using a 70 degree base. Normal degree days are calculated using a fixed 30-year average mostrecently updated in February 2002.

(2)In July 2005, WPL sold its interest in Kewaunee and upon closing of the sale entered into a long-term purchased power agreement topurchase energy and capacity from Kewaunee.

(3)Includes generation from SFEF that began commerical operation in June 2005, which WPL leases from Resources' Non-regulatedGeneration business.

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Interstate Power and Light Company



Total from retail customers 1,140.9 994.0 934.9 900.2 921.5Sales for resale 75.4 41.7 40.2 34.5 53.3Other 30.4 33.5 31.9 30.1 28.3

Total $1,246.7 $1,069.2 $1,007.0 $964.8 $1,003.1



Total 17,944 16,696 16,802 16,673 16,818



Customers (End of Period):Residential 454,176 450,595 448,719 446,202 439,508Commercial 80,238 78,137 77,043 76,856 75,132Industrial 1,996 1,915 1,888 1,898 1,836Other 1,317 1,280 1,327 1,328 1,359

Total 537,727 531,927 528,977 526,284 517,835


Cedar Rapids (normal - 379) 406 139 276 397 347Sources of electric energy (000s MWh):

Coal 9,782 10,348 10,232 9,889 9,997Purchased power 3,868 3,508 4,503 4,134 4,595Nuclear 3,177 3,451 2,791 3,202 2,697Gas 1,686 580 227 330 346Other 121 47 63 127 171

Total 18,634 17,934 17,816 17,682 17,806

Revenue per KWh from retail customers (cents) 7.08 6.50 6.07 5.84 6.02


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Wisconsin Power and Light Company



Total from retail customers 855.1 770.4 731.0 629.9 594.2Sales for resale 197.9 144.1 155.6 125.8 131.2Other 20.9 25.3 23.5 32.0 28.1

Total $1,073.9 $939.8 $910.1 $787.7 $753.5





Total 15,144 14,236 14,450 13,784 13,563

Customers (End of Period):Residential 395,669 389,150 381,840 376,027 368,246Commercial 53,911 53,015 52,087 51,356 50,407Industrial 1,048 1,001 1,014 1,007 990Other 2,051 2,032 2,035 2,016 1,965

Total 452,679 445,198 436,976 430,406 421,608


Madison (normal - 242) 421 138 224 356 305Sources of electric energy (000s MWh):

Coal 7,578 8,124 8,219 7,785 8,193Purchased power (2) 7,025 4,781 4,652 4,462 4,132Nuclear (2) 284 1,567 1,707 1,810 1,419Gas (3) 366 212 404 345 126Other 176 215 177 252 281

Total 15,429 14,899 15,159 14,654 14,151

Revenue per KWh from retail customers (cents) 7.99 7.44 7.19 6.28 5.95


(2)In July 2005, WPL sold its interest in Kewaunee and upon closing of the sale entered into a long-term purchased power agreement topurchase energy and capacity from Kewaunee.

(3)Includes generation from SFEF that began commerical operation in June 2005, which WPL leases from Resources' Non-regulatedGeneration business.

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2) GAS UTILITY OPERATIONSIPL and WPL provide gas service in Iowa, southern and central Wisconsin, southern Minnesota and northern and northwestern Illinois. Thenumber of gas customers and communities served at Dec. 31, 2005 were as follows:

Retail Transportation and CommunitiesCustomers Other Customers Served

IPL 238,999 234 253WPL 179,289 253 246

418,288 487 499

2005 gas utility operations accounted for 22% and 23% of operating revenues and 5% and 19% of operating income for IPL and WPL,respectively, which include providing gas services to retail and transportation customers.

IPL and WPL maintain purchase agreements with over 30 suppliers of natural gas from all gas producing regions of the U.S. and Canada. Themajority of the gas supply contracts are for terms of six months or less, with the remaining supply contracts having terms through 2006. IPL�sand WPL�s gas supply commitments are primarily market-based.



In providing gas commodity service to retail customers, Corporate Services administers a diversified portfolio of transportation and storagecontracts on behalf of IPL and WPL. Transportation contracts with Northern Natural Gas Company (NNG), Natural Gas Pipeline Co. ofAmerica (NGPL) and ANR Pipeline (ANR) allow access to gas supplies located in the U.S. and Canada. Arrangements with Firm CitygateSupplies (FCS) provide IPL and WPL with gas delivered directly to their service territories. In 2005, the maximum daily delivery capacity forIPL and WPL was as follows (in dekatherms (Dth)):

NNG NGPL ANR FCS TotalIPL 214,191 89,932 56,680 20,000 380,803WPL 101,739 -- 146,455 31,000 279,194

In addition to sales of natural gas to retail customers, IPL and WPL provide transportation service to commercial and industrial customers bymoving customer-owned gas through their distribution systems to the customers� meters. Revenues are collected for this service pursuant totransportation tariffs.

Alliant Energy owns several natural gas-fired generating facilities including Emery and SFEF and has responsibility under purchased poweragreements to supply natural gas to certain generating facilities including Riverside and RockGen. WPL has contracted with ANR to providefirm pipeline transportation of 60,000 Dths per day for the Riverside plant and 52,800 Dths per day (June to September) for SFEF. IPL andWPL also have contracts with several companies to provide fixed-price natural gas supply for these generating facilities with the longestcontracts having terms through October 2006. In addition to entering into fixed-price supply contracts, IPL and WPL have hedging programsreviewed by the IUB and PSCW, respectively, to help protect against the impacts of volatile natural gas prices. IPL and WPL expect thesefixed-price supply contracts and hedging programs will substantially mitigate the impact on its electric customers of volatile natural gas costsfor these generating facilities through December 2007.

The gas sales of IPL and WPL follow a seasonal pattern. There is an annual base load of gas used for heating and other purposes, with a largeheating peak occurring during the winter season. Natural gas obtained from producers, marketers and brokers, as well as gas in storage, isutilized to meet the peak heating season requirements. Storage contracts allow IPL and WPL to purchase gas in the summer, store the gas inunderground storage fields and deliver it in the winter. Gas storage met approximately 30% of both IPL�s and WPL�s annual gasrequirements in 2005.

Refer to Note 1(i) for information relating to utility natural gas cost recovery and Note 11(b) for discussion of natural gas commitments in the�Notes to Consolidated Financial Statements.�

Gas Environmental Matters - Refer to Note 11(e) of Alliant Energy�s �Notes to Consolidated Financial Statements� for discussion of gasenvironmental matters.

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Gas Operating Information 2005 2004 2003 2002 2001Operating Revenues (in millions):

Residential $358.1 $315.6 $310.7 $218.7 $270.2Commercial 202.0 172.3 162.7 111.3 141.1Industrial 43.8 38.4 34.2 25.2 31.3Transportation/other 81.2 43.5 59.3 38.8 45.3

Total $685.1 $569.8 $566.9 $394.0 $487.9

Gas Sales (000s Dths):Residential 28,554 29,338 31,871 30,931 29,580



Commercial 18,763 19,199 19,947 19,348 18,055Industrial 4,406 5,127 5,093 5,373 5,344Transportation/other 62,850 49,626 48,978 47,386 48,539

Total 114,573 103,290 105,889 103,038 101,518

Customers at End of Period (Excluding Transportation/Other):Residential 371,443 366,493 361,835 358,384 353,430Commercial 46,153 45,630 45,826 45,793 45,480Industrial 692 730 766 799 951

Total 418,288 412,853 408,427 404,976 399,861

Other Selected Gas Data:Heating degree days (1):

Cedar Rapids (IPL) (normal - 6,899) 6,534 6,463 6,883 6,577 6,535Madison (WPL) (normal - 7,485) 6,796 6,831 7,337 6,929 6,675

Revenue per Dth sold (excluding transportation/other) $11.68 $9.81 $8.92 $6.38 $8.35Purchased gas costs per Dth sold (excluding transportation/other) $8.68 $6.98 $6.11 $4.02 $6.31

(1)Heating degree days are calculated using a 65 degree base. Normal degree days are calculated using a fixed 30-year average mostrecently updated in February 2002.

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Interstate Power and Light Company



Total $362.8 $316.0 $294.5 $214.9 $281.0

Gas Sales (000s Dths):Residential 16,486 16,882 19,074 18,068 17,826Commercial 10,576 10,614 11,408 10,774 10,483Industrial 3,428 4,029 3,911 4,070 4,147Transportation/other 31,202 28,942 29,182 28,814 31,673

Total 61,692 60,467 63,575 61,726 64,129


Total 238,999 236,808 235,812 234,853 233,155




Cedar Rapids (normal - 6,899) 6,534 6,463 6,883 6,577 6,535Revenue per Dth sold (excluding transportation/other) $11.42 $9.67 $8.32 $6.19 $8.24Purchased gas cost per Dth sold (excluding transportation/other) $8.78 $7.27 $5.99 $4.11 $6.20

Wisconsin Power and Light Company



Total $322.3 $253.8 $272.4 $179.1 $206.9

Gas Sales (000s Dths):Residential 12,068 12,456 12,797 12,863 11,754Commercial 8,187 8,585 8,539 8,574 7,572Industrial 978 1,098 1,182 1,303 1,197Transportation/other 31,648 20,684 19,796 18,572 16,866

Total 52,881 42,823 42,314 41,312 37,389


Total 179,289 176,045 172,615 170,123 166,706


Madison (normal - 7,485) 6,796 6,831 7,337 6,929 6,675Revenue per Dth sold (excluding transportation/other) $12.04 $10.00 $9.83 $6.67 $8.54Purchased gas cost per Dth sold (excluding transportation/other) $8.53 $6.57 $6.29 $3.89 $6.47

(1)Heating degree days are calculated using a 65 degree base. Normal degree days are calculated using a fixed 30-year average mostrecently updated in February 2002.

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D. INFORMATION RELATING TO NON-REGULATED OPERATIONS

Resources manages a portfolio of wholly-owned subsidiaries and additional investments through distinct platforms: Non-regulatedGeneration, International and other non-regulated investments.

Non-regulated Generation - manages Alliant Energy�s non-regulated electric generating facilities. In 2005, Resources changed its focusfrom acquiring and developing new generating facilities to managing assets it currently owns. In June 2005, Resources completed theconstruction and commenced commercial operation of the 300 MW, simple-cycle, natural gas-fired SFEF near Sheboygan Falls, Wisconsin.



Resources owns SFEF and leases it to WPL for an initial period of 20 years. Refer to Note 3(b) of WPL�s �Notes to Consolidated FinancialStatements� for additional information regarding the SFEF lease. Resources also owns a 309 MW, non-regulated, tolled, natural gas-firedpower plant in Neenah, Wisconsin. The entire power output of the facility is sold under contract to Milwaukee-based We Energies throughMay 2008. Also included in Non-regulated Generation is Industrial Energy Applications, Inc., which provides on-site energy services withsmall standby generators.

International - International�s remaining investments include two equity investments in New Zealand as well as several generating facilitiesin China that Alliant Energy is divesting. Refer to Note 9 of Alliant Energy�s �Notes to Consolidated Financial Statements� for informationregarding International�s New Zealand investments and the sale of Alliant Energy�s investments in Brazil in January 2006.

Other non-regulated investments - includes investments in environmental engineering and site remediation, transportation, constructionmanagement services for wind farms and several other modest investments, as well as a resort development in Mexico (Laguna del Mar) andgas gathering pipeline systems that Alliant Energy is divesting. Environmental engineering and site remediation includes RMT, Inc., anenvironmental and engineering consulting company that serves clients nationwide in a variety of industrial market segments and specializes inconsulting on solid and hazardous waste management, site remediation, ground water quality monitoring and detection, and air quality control.Transportation includes a short-line railway that provides freight service between Cedar Rapids and Iowa City; barge terminal and haulingservices on the Mississippi River; and other transfer and storage services. Construction management services for wind farms includesWindConnect�, a construction management service company that provides expertise in engineering, designing, constructing and maintainingwind electric system projects.

Refer to �Strategic Overview� in MDA and Note 16 of Alliant Energy�s �Notes to Consolidated Financial Statements� for information onAlliant Energy�s focused approach to its non-regulated operations as well as various divestitures that Alliant Energy has completed and iscurrently pursuing.

E. DISCLOSURE CONCERNING WEBSITE ACCESS TO REPORTSAlliant Energy makes its periodic and current reports, and amendments to those reports, available, free of charge, on its website atwww.alliantenergy.com/investors on the same day as such material is electronically filed with, or furnished to, the Securities and ExchangeCommission (SEC). Alliant Energy is not including the information contained on its website as a part of, or incorporating it by reference into,this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS

You should carefully consider each of the risks described below relating to Alliant Energy, IPL and WPL, together with all of the otherinformation contained in this combined Annual Report on Form 10-K, before making an investment decision with respect to our securities. Ifany of the following risks develop into actual events, our business, financial condition, results of operations or cash flows could be materiallyand adversely affected and you may lose all or part of your investment.

Risks related to the regulation of our business could impact the rates we are able to charge, our costs and our profitability - We aresubject to comprehensive regulation by federal and state regulatory authorities, which significantly influences our operating environment andthe ability to timely recover costs from customers. In particular, our utilities are regulated by regulatory authorities with jurisdiction overpublic utilities, including the IUB, the PSCW, the ICC, the MPUC and FERC. These authorities regulate many aspects of our operations,including, but not limited to: construction and maintenance of facilities; operations; safety; issuance of securities; accounting matters;transactions between affiliates; rates charged to customers; our ability to site and construct new generation plants; costs of fuel, purchasedpower and natural gas that can be recovered from customers; and the authorized rates of return on capital. The ability of our utilities to obtainrate adjustments

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to maintain current rates of return depends upon regulatory action under applicable statutes and regulations, and we cannot assure that rateadjustments will be obtained or current authorized rates of return on capital will be earned. These regulatory authorities are also empowered toimpose financial penalties and other sanctions on us and our utilities if found to have violated statutes and regulations governing utilityoperations. Currently, IPL and WPL have certain pending rate cases. If IPL and WPL do not receive the expected amount of rate relief, ratesare reduced, the increased rates are not approved on a timely basis or costs are otherwise unable to be recovered through rates, we mayexperience an adverse impact on our financial condition, results of operations and cash flows. We, through our international subsidiaries, arealso subject to international rate regulation in the foreign markets in which we operate.

We are unable to predict the impact on our business and operating results from the future regulatory activities of any of these agencies.Changes in regulations or the imposition of additional regulations may require us to incur additional expenses or change business operationsor our business plan, particularly as it relates to our utilities, which may have an adverse impact on our financial condition, results ofoperations and cash flows. In addition, federal regulatory reforms mandated by the Energy Policy Act of 2005 may produce unexpectedchanges and costs in the public utility industry that could cause us to incur additional expenses or change business operations, which may havean adverse impact on our financial condition, results of operations and cash flows.

Changes in commodity prices may increase the cost of producing electric energy or decrease the amount our subsidiaries receive fromselling electric energy, harming our financial performance - The prices that we may obtain for electric energy may not compensate forchanges in coal, natural gas or energy spot-market costs, or changes in the relationship between such costs and the market prices of electricenergy, and so our utilities may be unable to pass on the changes in costs to their customers, which may result in an adverse effect on ourfinancial condition, results of operations and cash flows. We are heavily exposed to changes in the price and availability of coal because themajority of the electricity generated by us is from our coal-fired generating facilities. We, through our utilities, have contracts of varyingdurations for the supply and transportation of coal for most of our existing generating capability, but as these contracts end or otherwise arenot honored, we may not be able to purchase coal on terms as favorable as the current contracts. Further, we rely on coal primarily from thePower River Basin in Wyoming and any disruption of coal production in, or transportation from, that region may cause us to incur additionalcosts and adversely affect our financial condition. Our utilities also have responsibility to supply gas to natural gas-fired electric generatingfacilities that we own and lease, which increase our exposure to the more volatile market prices of natural gas. We, through our utilities, havenatural gas supply contracts in place which are generally short term in duration. The gas supply commitments are either fixed price in natureor market-based. As some of the contracts are market-based, and all of the contracts are short-term, we may not be able to purchase gas onterms as favorable as the current contracts when the current contracts expire. Further, natural gas supplies originate primarily in the Gulf ofMexico region of the U.S. and any disruption of production of natural gas in that region, and transportation of natural gas from that region,may cause us to incur additional costs to purchase natural gas that may adversely impact our financial condition, results of operations and cashflows.

We are engaged in sales of assets and businesses; however, market conditions and other factors may hinder this strategy - We are inthe process of selling, and may continue to sell, non-core assets. Sales prices for assets and businesses could fluctuate. Asset sales under poormarket conditions could result in substantial losses. Buyers may find it difficult to obtain financing to purchase these assets. As part of anyasset sale, we face challenges associated with pricing the assets correctly and limiting our environmental or other retained liabilities. Thesetransactions also may divert management attention and other resources from day-to-day operations. Several factors specific to us could makeasset sales particularly challenging. We are subject to regulatory approvals for the sale of certain assets, as are potential purchasers. Theseapprovals can impose delays and structuring complications on asset sale transactions. Potential buyers may be reluctant to enter intoagreements to purchase assets from us if they believe that required consents and approvals will result in significant delays or uncertainties inthe transaction process. Some of the assets we are selling are international assets, located in China and Mexico, and are subject to internationalregulatory approvals. Further, the value of our international assets may fluctuate due to political and economic instability, local labor marketconditions, the impact of government regulations and taxation, differences in business practices and fluctuations in foreign exchange rates incountries where those assets or buyers are located and we may not be able to realize the full value of our international assets.

Costs of compliance with new laws and the incurrence of liabilities, particularly related to the environment, could adversely affect ourprofitability - Our operations are subject to extensive regulation including environmental protection. New laws and regulations affecting ouroperations have been and may be adopted, including the Clean Air Mercury Rule and the Clean Air Interstate Rule, each as adopted by theEPA, and new interpretations of existing laws and regulations could be adopted or become applicable to us or our facilities, which may



substantially increase compliance expenditures made by us in the future. We also have current or previous ownership interests in sitespreviously associated with the production of gas for

15

which we may be liable for investigation, remediation and monitoring costs relating to the sites. Compliance with current and future federaland state environmental laws and regulations may result in increased capital, operating and other costs, including remediation and containmentexpenses and monitoring obligations. We cannot predict with certainty the amount and timing of all future expenditures (including thepotential or magnitude of fines or penalties) related to environmental matters because of the difficulty of estimating clean-up and compliancecosts, the uncertainty in quantifying liabilities under environmental laws that impose joint and several liabilities on all potentially responsibleparties, the possibility that changes will be made to the current environmental laws and regulations, and the uncertainty regarding the type ofcompliance that will be required by final rules and regulations. Future changes in the interpretation of the Clean Air Act�s New SourceReview provisions could potentially increase our operating and maintenance costs substantially.

Our operating results may fluctuate on a seasonal and quarterly basis and can be adversely affected by the impacts of weather - Ourelectric and gas utility businesses are seasonal businesses and weather patterns can have a material impact on their operating performance.Demand for electricity is greater in the summer months associated with cooling. In addition, market prices for electricity peak in the summer.Demand for natural gas depends significantly upon weather patterns in winter months due to heavy use for residential and commercial heating.As a result, our overall operating results in the future may fluctuate substantially on a seasonal basis. In addition, our utilities have historicallygenerated less revenues and income when weather conditions are warmer in the winter and cooler in the summer. We expect that unusuallymild winters and summers could have an adverse effect on our financial condition, results of operations and cash flows.

At times, demand for electric energy could exceed our supply capacity - We are currently obligated to supply electric energy in parts ofIowa, Wisconsin, Minnesota and Illinois. From time to time and because of unforeseen circumstances, the demand for electric energy requiredto meet these obligations could exceed our available electric generating capability and energy commitments pursuant to long-term purchasepower agreements. If this occurs, we would have to buy electric energy on the market. Our utilities may not always have the ability to pass thecosts of purchasing the electric energy on to their customers, and even if they are able to do so, there may be a significant delay between thetime the costs are incurred and the time the costs are recovered. Since these situations most often occur during periods of peak demand, it ispossible that the market price for electric energy at the time we purchase it could be very high. Even if a supply shortage was brief, we couldsuffer substantial losses that could diminish our financial condition, results of operations and cash flows.

Failure to provide reliable service to our utility customers could adversely affect our operating results - Our utilities are obligated toprovide safe and reliable service to their customers within their service territories. Meeting this commitment requires significant capital andother resources. Failure to provide safe and reliable service, including effects of equipment failures in electric and gas delivery systems, couldadversely affect our operating results through reduced revenues and increased maintenance and capital costs. The North Americantransmission grid is highly interconnected and, in extraordinary circumstances, disruptions at particular points within the grid could cause anextensive power outage in our delivery systems. Power outages in our service territories could result from factors outside of our control orservice territories.

The transmission system in our utilities�� service area is constrained, which could impact our ability to provide reliable service to ourutility customers and increase the cost of purchased power - The transmission system in our utilities� service territories, especially inWisconsin, is constrained, limiting our ability to transmit electric energy within our service territories and access electric energy from outsideof our service territories. The transmission constraints could result in failure to provide reliable service to our utility customers or not beingable to access lower cost sources of electric energy.

Threats of terrorism and catastrophic events that could result from terrorism or natural disasters may impact our operations inunpredictable ways - We are subject to direct and indirect effects of terrorist threats and activities. Generation and transmission facilities, ingeneral, have been identified as potential targets. The effects of terrorist threats and activities include, among other things, terrorist actions orresponses to such actions or threats, the inability to generate, purchase or transmit electric energy, the risk of significant slowdown in growthor a decline in the U.S. economy, disruption or volatility in, or other effects on capital markets, and the increased cost and adequacy of



security and insurance. Catastrophic natural disasters may also impact our operations. Natural disasters may adversely impact our ability togenerate, purchase or transmit electric energy or obtain fuel sources and may significantly slow growth, or cause a decline, in the economywithin our service territories.

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The operation of electric generating stations or the construction or capital improvement of utility facilities may involve unanticipatedchanges or delays in operations that could negatively impact our business, and our financial condition, results of operations and cashflows - The operation of electric generating stations involves many risks, including start-up risks, breakdown or failure of equipment,transmission lines or pipelines, use of technology, the dependence on a specific fuel source, including the supply and transportation of fuel, aswell as the risk of performance below expected or contracted levels of output or efficiency. These risks could negatively impact our businessthrough asset degradation, lost revenues or increased costs, including the cost of replacement power. Additionally, our ability to successfullyand timely complete construction of utility facilities or planned capital improvements to existing facilities within established budgets iscontingent upon many variables and may be subject to substantial risks. Should such efforts be unsuccessful, we could be subject to additionalcosts and increased risk of non-recovery of construction or improvement costs through rates.

A downgrade in our credit ratings could negatively affect borrowing costs and access to capital to operate our business - Our creditratings may be dependent on, among other things, the success of execution of our strategic plan. If our business changes as a result of marketor other conditions, our ratings could be adversely affected. The failure to meet the goals set forth in our strategic plan from time to time couldcause our credit ratings to be lowered. If either Standard & Poor�s Ratings Services or Moody�s Investors Service were to downgrade ourcredit ratings, then borrowing costs would increase, which would diminish our financial results, and our potential pool of investors andfunding sources could decrease. In addition, some of our subsidiaries access debt and other capital from various sources and carry their owncredit ratings. Any downgrade or other event negatively affecting the credit ratings of these subsidiaries could make their own costs ofborrowing higher or access to funding sources more limited, which in turn could increase our need to provide liquidity in the form of capitalcontributions or loans to such subsidiaries, thus reducing the liquidity and borrowing availability of the consolidated group. We, andparticularly our utility business, rely on accessing the capital markets to support capital expenditure programs and other capital requirements,including expenditures to build utility infrastructure and comply with future regulatory requirements. If our access to capital were to becomesignificantly constrained or costs of capital increased significantly due to lowered credit ratings, prevailing market or industry conditions,regulatory constraints or other factors, our financial condition, results of operations and cash flows could be significantly adversely affected.

We are subject to limitations on our ability to pay dividends - Alliant Energy is a holding company with no significant operations of itsown. Accordingly, the primary sources of funds for Alliant Energy to pay dividends to its shareowners are dividends and distributions from itssubsidiaries and investments. Our subsidiaries and investments are separate and distinct legal entities and have no obligation to pay anyamounts to us, whether by dividends, loans or other payments. The ability of our subsidiaries and investments to pay dividends or makedistributions to us and, accordingly, our ability to pay dividends on Alliant Energy common stock will depend on regulatory limitations andthe earnings, cash flows, capital requirements and general financial condition of our subsidiaries and investments. Our utilities each havedividend payment restrictions based on their respective bond indentures, the terms of their outstanding preferred stock and regulatorylimitations applicable to them. If we do not receive adequate dividends and distributions from our subsidiaries and investments, then we maynot be able to make, or may have to reduce, dividend payments on Alliant Energy common stock.

We are subject to employee workforce factors that could affect our businesses and financial condition - We are subject to employeeworkforce factors, including loss or retirement of key personnel, availability of qualified personnel, collective bargaining agreements withemployees and work stoppage that could affect our businesses and financial condition, results of operations and cash flows.

Energy industry changes, including changes in technology, could have a negative effect on our businesses - As a public utility holdingcompany with significant utility assets, we conduct our utility operations in an ever-changing business environment. Competitive pressures,including advances in technology that reduce the costs of alternative methods of producing electric energy to a level that is competitive withthat of current electric production methods, could result in our utilities losing market share and customers and incurring stranded costs (i.e.,assets and other costs rendered unrecoverable through customer rates as a result of competitive pricing), which would be borne by ourshareowners. Although the pace of restructuring in our primary retail electric service territories has been delayed (and may continue to be



delayed for a long period of time) due to uncertainty and developments in the industry, we cannot predict the timing of a restructured electricindustry or the impact on our financial condition, results of operations or cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIESIPLIPL�s electric generating stations at Dec. 31, 2005, were as follows:

Name and Location Primary Fuel 2005 Summerof Station Type Capability in KWs

Duane Arnold Energy Center, Palo, IA Nuclear 395,430 (1)

Ottumwa Generating Station, Ottumwa, IA Coal 321,665 (2)Prairie Creek Station, Cedar Rapids, IA Coal 212,468Sutherland Station, Marshalltown, IA Coal 142,422Sixth Street Station, Cedar Rapids, IA Coal 59,540Burlington Generating Station, Burlington, IA Coal 214,926George Neal Unit 3, Sioux City, IA Coal 144,200 (3)George Neal Unit 4, Sioux City, IA Coal 165,476 (4)Dubuque Units 2, 3 and 4, Dubuque, IA Coal 77,518M. L. Kapp Plant Units 1 and 2, Clinton, IA Coal 239,097Lansing Units 1, 2, 3 and 4, Lansing, IA Coal 317,240Louisa Unit 1, Louisa, IA Coal 28,000 (5)

Total Coal 1,922,552

Marshalltown Combustion Turbines, Marshalltown, IA Oil 168,958Centerville Combustion Turbines, Centerville, IA Oil 50,738Montgomery Combustion Turbine Unit 1, Montgomery, MN Oil 19,733Fox Lake Plant Combustion Turbine Unit 4, Sherburn, MN Oil 19,745Lime Creek Plant Combustion Turbine Units 1 and 2,Mason City, IA Oil 73,486

Diesel Stations, in IA/MN Oil 18,533Total Oil 351,193

Emery Generating Station, Mason City, IA Gas 561,270Grinnell Station, Grinnell, IA Gas 45,272Agency Street Combustion Turbines, West Burlington, IA Gas 65,452Burlington Combustion Turbines, Burlington, IA Gas 68,128Red Cedar Combustion Turbine, Cedar Rapids, IA Gas 17,170Fox Lake Plant Units 1, 2 and 3, Sherburn, MN Gas 109,807

Total Gas 867,099



Total generating capability 3,536,274

All KWs shown below represent the 2005 summer generating capability.

(1) Represented IPL�s 70% ownership interest in this 564,900 KW generating station. Refer to Note 18 of Alliant Energy�s �Notes toConsolidated Financial Statements� for information regarding the sale of IPL�s interest in DAEC in January 2006.

(2) Represents IPL�s 48% ownership interest in this 670,136 KW generating station, which is operated by IPL.(3) Represents IPL�s 28% ownership interest in this 515,000 KW generating station, which is operated by MidAmerican Energy Company

(MidAmerican).(4) Represents IPL�s 25.7% ownership interest in this 644,000 KW generating station, which is operated by MidAmerican.(5) Represents IPL�s 4% ownership interest in this 700,000 KW generating station, which is operated by MidAmerican.

At Dec. 31, 2005, IPL owned approximately 20,111 miles of overhead electric distribution line and 2,283 miles of underground electricdistribution cable, as well as 7,084 miles of electric transmission line and 792 distribution and transmission substations substantially alllocated in Iowa and Minnesota. IPL�s gas properties consist primarily of mains and services, meters, regulating and gate stations and otherrelated distribution equipment. The gas distribution facilities of IPL at Dec. 31, 2005, included approximately 4,906 miles, 227 miles and 255miles of gas mains located in Iowa, Minnesota and Illinois, respectively. IPL�s other property included in �Other plant in service� on itsConsolidated Balance Sheets consists primarily of operating and storeroom facilities, vehicles, computer hardware and software,communication equipment and other miscellaneous tools and equipment. IPL�s properties are suitable for their intended use and substantiallyall are held subject to the liens of indentures relating to IPL�s Collateral Trust Bonds and First Mortgage Bonds. Refer to �StrategicOverview� in MDA for discussion of Alliant Energy�s utility generation plan, IPL�s transmission assets and IPL�s properties in Illinois that itis divesting.

18

WPLWPL�s electric generating stations at Dec. 31, 2005, were as follows:

Name and Location Primary Fuel 2005 Summerof Station Type Capability in KWs

Nelson Dewey Generating Station, Cassville, WI Coal 220,136Edgewater Generating Station #3, Sheboygan, WI Coal 75,150Edgewater Generating Station #4, Sheboygan, WI Coal 220,354 (1)Edgewater Generating Station #5, Sheboygan, WI Coal 311,250 (2)Columbia Energy Center, Portage, WI Coal 505,522 (3)Total Coal 1,332,412

Blackhawk Generating Station, Beloit, WI Gas 50,950Rock River Generating Station, Beloit, WI Gas 152,970Rock River Combustion Turbine, Beloit, WI Gas 151,560South Fond du Lac Combustion Turbine

Units 2 and 3, Fond du Lac, WI Gas 157,810Sheepskin Combustion Turbine, Edgerton, WI Gas 37,330Total Gas 550,620

Kilbourn Hydro Plant, Wisconsin Dells, WI Hydro 8,000Prairie du Sac Hydro Plant, Prairie du Sac, WI Hydro 19,000Total Hydro 27,000



Total generating capability 1,910,032

All KWs shown below represent the 2005 summer generating capability.

(1) Represents WPL�s 68.2% ownership interest in this 323,100 KW generating station, which is operated by WPL.(2) Represents WPL�s 75% ownership interest in this 415,000 KW generating station, which is operated by WPL.(3) Represents WPL�s 46.2% ownership interest in this 1,094,202 KW generating station, which is operated by WPL.

At Dec. 31, 2005, WPL owned approximately 17,035 miles of overhead electric distribution line and 3,771 miles of underground electricdistribution cable, as well as 163 distribution substations located adjacent to the communities served, substantially all located in Wisconsin. In2001, WPL�s transmission assets were transferred to ATC. WPL�s gas properties consist primarily of mains and services, meters, regulatingand gate stations and other related distribution equipment. The gas distribution facilities of WPL at Dec. 31, 2005, included approximately3,771 miles and 164 miles of gas mains located in Wisconsin and Illinois, respectively. WPL�s other property included in �Other plant inservice� on its Consolidated Balance Sheets consists primarily of operating and storeroom facilities, vehicles, computer hardware andsoftware, communication equipment and other miscellaneous tools and equipment. WPL�s properties are suitable for their intended use andsubstantially all are held subject to the lien of WPL�s First Mortgage Bond indenture. Refer to �Strategic Overview� in MDA for furtherdiscussion of Alliant Energy�s generation plan and WPL�s properties in Illinois that it is divesting. Refer to Note 3(b) of WPL�s �Notes toConsolidated Financial Statements� for information regarding WPL�s lease of SFEF from Resources� Non-regulated Generation business.Refer to Note 17 of Alliant Energy�s �Notes to Consolidated Financial Statements� for information regarding the sale of WPL�s interest inKewaunee.

ResourcesResources� principal properties included in �Property, plant and equipment� on Alliant Energy�s Consolidated Balance Sheet at Dec. 31,2005 were as follows:

Non-regulated Generation - includes two principal electric generating facilities: 1) a 309 MW, tolled (through May 2008), natural gas-firedfacility in Neenah, Wisconsin; and 2) a 300 MW, natural gas-fired facility near Sheboygan Falls, Wisconsin, which is leased to WPL. Inaddition, Industrial Energy Applications, Inc. owns standby generation and steam production systems substantially all located in Iowa andResources owns a steam turbine.

Other non-regulated investments - includes a short-line railway in Iowa with 112 railroad track miles, 13 active locomotives and 190 railcars;and a barge terminal on the Mississippi River.

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ITEM 3. LEGAL PROCEEDINGS

Alliant Energy - Alliant Energy asserted its rights in a series of judicial and administrative proceedings as a minority shareholder inCompanhia Força e Luz Cataguazes-Leopoldina, S.A. (Cataguazes), Alliant Energy�s former Brazil investment, in an attempt to control costsand reduce debt. Two of these proceedings, separate arbitrations under the International Chamber of Commerce, resulted in final and bindingorders on the merits of the claims. Alliant Energy�s rights and responsibilities under both of the arbitration decisions and all other judicial andadministrative proceedings were transferred to the purchaser of Alliant Energy�s Brazil investments in January 2006. In addition, AlliantEnergy�s rights and responsibilities, except the non-refundable deposit previously paid to Alliant Energy, under a settlement agreement of thearbitration award related to the Usina Termelétrica de Juiz de Fora S.A. (Juiz de Fora) natural gas-fired generating facility were transferred tothe purchaser of Alliant Energy�s Brazil investments in January 2006. Alliant Energy no longer has any interest in these proceedings.

IPL - None.



WPL - None.

In addition to the legal proceedings discussed in Alliant Energy�s, IPL�s and WPL�s reports to the SEC, Alliant Energy, IPL and WPL arecurrently, and from time to time, subject to claims and suits arising in the ordinary course of business. Although the results of these legalproceedings cannot be predicted with certainty, management believes, after consultation with legal counsel, that the ultimate resolution ofthese proceedings will not have a material adverse effect on Alliant Energy�s, IPL�s or WPL�s financial condition, results of operations orcash flows.

Environmental MattersAdditional information required by Item 3 with regards to environmental matters is included in �C. Information Relating to Utility Operations- Electric Utility Operations� in �Business,� �Liquidity and Capital Resources� in MDA and Note 11(e) of Alliant Energy�s �Notes toConsolidated Financial Statements,� which information is incorporated herein by reference.

Rate MattersThe information required by Item 3 with regards to rate matters is included in �Business,� Notes 1(c) and 2 of Alliant Energy�s �Notes toConsolidated Financial Statements� and �Rates and Regulatory Matters� in MDA, which information is incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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EXECUTIVE OFFICERS OF THE REGISTRANTSNone of the executive officers for Alliant Energy, IPL or WPL listed below are related to any member of the Board of Directors or nomineefor director or any other executive officer. All of the executive officers have no definite terms of office and serve at the pleasure of the Boardof Directors. The executive officers of Alliant Energy, IPL and WPL as of the date of this filing are as follows (numbers following the namesrepresent the officer�s age as of Dec. 31, 2005):

Executive Officers of Alliant EnergyWilliam D. Harvey, 56, was elected Chairman of the Board effective February 2006 and President and Chief Executive Officer (CEO)effective July 2005 and has been a board member since January 2005. He previously served as President and Chief Operating Officer (COO)since 2004 and Executive Vice President (EVP)-Generation from 1998 to 2003.Eliot G. Protsch, 52, was elected Senior EVP and Chief Financial Officer (CFO) effective January 2004. He previously served as EVP andCFO since September 2003 and as EVP-Energy Delivery from 1998 to September 2003.Barbara J. Swan, 54, was elected EVP and General Counsel effective October 1998.Thomas L. Aller, 56, was elected Senior Vice President-Energy Delivery effective January 2004. He previously served as interim EVP-EnergyDelivery since September 2003 and as Vice President (VP)-Investments at Resources from 1998 to 2003.Dundeana K. Doyle, 47, was elected VP-Strategy and Risk effective May 2003. She previously served as VP-Infrastructure Security since2002 and as VP-Customer Operations of IPL, WPL and Corporate Services from 1998 to 2002.Thomas L. Hanson, 52, was elected VP and Treasurer effective April 2002. He previously served as Managing Director-Generation Servicessince 2001.Patricia L. Kampling, 46, was elected VP-Finance effective August 2005. She previously served as Treasurer of IPSCO Inc. since September2004 and Senior VP and CFO of Exelon Enterprises Company, LLC (a subsidiary of Exelon Corporation) from 2000 to 2002.John E. Kratchmer, 43, was elected VP-Controller and Chief Accounting Officer (CAO) effective October 2002. He previously served asCorporate Controller and CAO since 2000.

Executive Officers of IPL



William D. Harvey, 56, was elected Chairman of the Board effective February 2006 and CEO effective July 2005 and has been a boardmember since January 2005. He previously served as COO since 2004 and EVP-Generation from 1998 to 2003.Thomas L. Aller, 56, was elected President effective January 2004.Eliot G. Protsch, 52, was elected CFO effective January 2004. He previously served as EVP and CFO since September 2003 and also asPresident from 1998 through 2003.Barbara J. Swan, 54, was elected EVP and General Counsel effective October 1998.Thomas L. Hanson, 52, was elected VP and Treasurer effective April 2002.Patricia L. Kampling, 46, was elected VP-Finance effective August 2005.John E. Kratchmer, 43, was elected VP-Controller and CAO effective October 2002.

Executive Officers of WPLWilliam D. Harvey, 56, was elected Chairman of the Board effective February 2006 and CEO effective July 2005 and has been a boardmember since January 2005. He previously served as COO since 2004 and President from 1998 to 2003.Barbara J. Swan, 54, was elected President effective January 2004. She previously served as EVP and General Counsel since 1998.Eliot G. Protsch, 52, was elected CFO effective January 2004. He previously served as EVP and CFO since September 2003 and EVP-EnergyDelivery from 1998 to September 2003.Thomas L. Aller, 56, was elected Senior VP-Energy Delivery effective January 2004.Thomas L. Hanson, 52, was elected VP and Treasurer effective April 2002.Patricia L. Kampling, 46, was elected VP-Finance effective August 2005.John E. Kratchmer, 43, was elected VP-Controller and CAO effective October 2002.

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PART II

ITEM 5. MARKET FOR REGISTRANTS�� COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES

Alliant Energy�s common stock trades on the New York Stock Exchange under the symbol �LNT.� Quarterly sales price ranges anddividends with respect to Alliant Energy�s common stock were as follows:

2005 2004Quarter High Low Dividend High Low DividendFirst $28.59 $25.80 $0.2625 $26.50 $24.54 $0.25Second 28.26 25.56 0.2625 26.55 23.50 0.25Third 30.58 27.85 0.2625 27.40 24.34 0.25Fourth 30.38 25.79 0.2625 28.80 24.90 0.2625

Year 30.58 25.56 1.05 28.80 23.50 1.0125

Stock closing price at Dec. 31, 2005: $28.04

Although Alliant Energy�s practice has been to pay cash dividends on its common stock quarterly, the timing of payment and amount offuture dividends are necessarily dependent upon future earnings, capital requirements, general financial condition, general business conditions,the ability of Alliant Energy�s subsidiaries to pay dividends, approval from its Board of Directors and other factors. In January 2006, AlliantEnergy announced an increase in its quarterly common stock dividend from $0.2625 per share to $0.2875 per share, which is equivalent to anannual rate of $1.15 per share, beginning with the Feb. 15, 2006 dividend payment.

At Dec. 31, 2005, there were approximately 46,912 holders of record of Alliant Energy�s stock, including holders through Alliant Energy�sShareowner Direct Plan.



Alliant Energy is the sole common shareowner of all 13,370,788 shares of IPL common stock currently outstanding. During 2005 and 2004,IPL paid dividends on its common stock of $110 million and $102 million, respectively, to Alliant Energy. In accordance with the IUB orderauthorizing the IPL merger, IPL must inform the IUB if its common equity ratio falls below 42% of total capitalization. Alliant Energy is thesole common shareowner of all 13,236,601 shares of WPL common stock currently outstanding. During 2005 and 2004, WPL paid dividendson its common stock of $90 million and $89 million, respectively, to Alliant Energy. In its July 2005 rate order, the PSCW stated WPL maynot pay annual common stock dividends, including pass-through of subsidiary dividends, in excess of $92 million to Alliant Energy if WPL�sactual average common equity ratio, on a financial basis, is or will fall below the test year authorized level of 53.14%. WPL�s dividends arealso restricted to the extent that such dividend would reduce the common stock equity ratio to less than 25%. IPL and WPL each havecommon stock dividend payment restrictions based on their respective bond indentures and the terms of their outstanding preferred stock. AtDec. 31, 2005, IPL and WPL were in compliance with all such dividend restrictions.

A summary of Alliant Energy common stock repurchases for the quarter ended Dec. 31, 2005 was as follows:

Maximum Number (orTotal Number of Approximate Dollar

Total Number Average Shares Purchased as Value) of Shares thatof Shares Price Paid Part of Publicly May Yet Be Purchased

Period Purchased (1) per Share Announced Plan Under the Plan (1)Oct. 1 to Oct. 31 418

$27.68--

N/A

Nov. 1 to Nov. 30 2,354 27.19 --N/A

Dec. 1 to Dec. 31 608 28.45 --N/A

3,380 27.48 --N/A

(1) Represents shares of Alliant Energy common stock purchased on the open market and held in a grantor trust under the Alliant Energy KeyEmployee Deferred Compensation Plan (KEDCP). There is no limit on the number of shares of Alliant Energy common stock that may beheld under the KEDCP, which does not have an expiration date.

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ITEM 6. SELECTED FINANCIAL DATA

Alliant Energy

Financial Information 2005 (1) 2004 (1) 2003 (1) 2002 2001(dollars in millions, except per share data)

Income Statement Data:Operating revenues $3,279.6 $2,804.8 $2,726.0 $2,330.0 $2,443.5Income from continuing operations 56.4 218.4 151.7 85.0 123.5Income (loss) from discontinued operations, net of tax (64.1) (72.9) 37.8 21.9 61.8Income before cumulative effect of changes in



accounting principles (7.7) 145.5 189.5 106.9 185.3Cumulative effect of changes in accounting

principles, net of tax -- -- (6.0) -- (12.9)Net income (loss) (7.7) 145.5 183.5 106.9 172.4

Common Stock Data:Earnings per average common share (basic):

Income from continuing operations $0.48 $1.93 $1.50 $0.94 $1.53Income (loss) from discontinued operations ($0.55) ($0.65) $0.37 $0.24 $0.77Cumulative effect of changes in accounting principles $-- $-- ($0.06) $-- ($0.16)Net income (loss) ($0.07) $1.28 $1.81 $1.18 $2.14

Earnings per average common share (diluted):Income from continuing operations $0.48 $1.92 $1.50 $0.94 $1.53Income (loss) from discontinued operations ($0.55) ($0.64) $0.37 $0.24 $0.77Cumulative effect of changes in accounting principles $-- $-- ($0.06) $-- ($0.16)Net income (loss) ($0.07) $1.28 $1.81 $1.18 $2.14

Common shares outstanding at year-end (000s) 117,036 115,742 110,963 92,304 89,682Dividends declared per common share $1.05 $1.0125 $1.00 $2.00 $2.00Market value per share at year-end $28.04 $28.60 $24.90 $16.55 $30.36Book value per share at year-end $20.85 $22.13 $21.37 $19.89 $21.39Market capitalization at year-end $3,281.7 $3,310.2 $2,763.0 $1,527.6 $2,722.7

Other Selected Financial Data:Cash flows from operating activities (continuing operations) $600.2 $498.2 $438.6 $481.1 $447.5Construction and acquisition expenditures $527.6 $633.4 $815.6 $624.0 $613.1Total assets at year-end $7,733.1 $8,275.2 $7,797.5 $7,848.2 $7,007.5Long-term obligations, net $2,147.0 $2,502.0 $2,307.8 $2,770.3 $2,564.3Times interest earned before income taxes (2) 1.13X 2.86X 2.19X 1.78X 2.05XCapitalization ratios:

Common equity 48% 48% 48% 37% 42%Preferred stock 5% 5% 5% 4% 2%Long- and short-term debt 47% 47% 47% 59% 56%

Total 100% 100% 100% 100% 100%

(1) Refer to "Alliant Energy Results of Operations" in MDA for a discussion of the 2005, 2004 and 2003 results of operations.

(2)Represents income from continuing operations before income taxes plus preferred dividend requirements of subsidiaries plus interestexpense divided by interest expense. The calculation does not consider the "Loss on early extinguishment of debt" that Alliant Energyhas incurred as part of interest expense.

23

IPL 2005 (1) 2004 (1) 2003 (1) 2002 2001(in millions)

Operating revenues $1,681.7 $1,459.6 $1,371.2 $1,242.4 $1,352.6Earnings available for common stock 149.7 110.3 87.1 88.0 94.7Cash dividends declared on common stock 109.9 102.0 89.1 81.8 80.3Cash flows from operating activities 332.0 347.6 322.4 250.0 306.1Total assets 3,976.6 3,869.1 3,621.0 3,192.8 2,854.2Long-term obligations, net 993.4 1,038.9 910.5 902.2 922.9



(1) Refer to �IPL Results of Operations� in MDA for a discussion of the 2005, 2004 and 2003 results of operations.

Alliant Energy is the sole common shareowner of all 13,370,788 shares of IPL�s common stock outstanding. As such, earnings per share datais not disclosed herein.

WPL 2005 (1) 2004 (1) 2003 (1) 2002 2001(in millions)

Operating revenues $1,409.6 $1,209.8 $1,217.0 $989.5 $993.7Earnings available for common stock 101.8 110.4 111.6 77.6 70.2Cash dividends declared on common stock 89.8 89.0 70.6 59.6 60.4Cash flows from operating activities 176.6 199.3 138.5 223.9 135.9Total assets 2,667.6 2,656.1 2,469.3 2,335.1 2,217.5Long-term obligations, net 403.7 491.3 453.5 523.3 523.2

(1) Refer to �WPL Results of Operations� in MDA for a discussion of the 2005, 2004 and 2003 results of operations.

Alliant Energy is the sole common shareowner of all 13,236,601 shares of WPL�s common stock outstanding. As such, earnings per sharedata is not disclosed herein.

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ITEM 7. MANAGEMENT��S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS (MDA)

This MDA includes information relating to Alliant Energy Corporation (Alliant Energy), Interstate Power and Light Company (IPL) andWisconsin Power and Light Company (WPL) (as well as Alliant Energy Resources, Inc. (Resources) and Alliant Energy Corporate Services,Inc. (Corporate Services)). Where appropriate, information relating to a specific entity has been segregated and labeled as such. The followingdiscussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated FinancialStatements included in this report. Unless otherwise noted, all �per share� references in MDA refer to earnings per diluted share.

FORWARD-LOOKING STATEMENTS

Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors fromliability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks anduncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, ofthe risks and uncertainties include: weather effects on results of operations; economic and political conditions in Alliant Energy�s serviceterritories; federal, state and international regulatory or governmental actions, including the impact of the Energy Policy Act of 2005 (EPAct2005) and other energy-related legislation in Congress and federal tax legislation; the ability to obtain adequate and timely rate relief to allowfor, among other things, the recovery of operating costs and deferred expenditures, the earning of reasonable rates of return in current andfuture rate proceedings and the payment of expected levels of dividends; unanticipated construction and acquisition expenditures;unanticipated issues in connection with Alliant Energy�s construction of new generating facilities; issues related to the supply of fuel andpurchased electricity and price thereof, including the ability to recover purchased power, fuel and fuel-related costs through rates in a timelymanner; the impact higher fuel and fuel-related prices may have on customer demand for utility services, customers� ability to pay utility billsand Alliant Energy�s ability to collect unpaid utility bills; unplanned outages at Alliant Energy�s generating facilities and risks related torecovery of increased costs through rates; issues related to electric transmission, including operating in the new Midwest Independent SystemOperator (MISO) energy market, the impact of potential future billing adjustments from MISO, recovery of costs incurred, and federallegislation and regulation affecting such transmission; impact of weather hedges on Alliant Energy�s utility earnings; costs associated withAlliant Energy�s environmental remediation efforts and with environmental compliance generally; unanticipated issues related to the Calpine



Corporation (Calpine) bankruptcy that could adversely impact Alliant Energy�s purchased power agreements; developments that adverselyimpact Alliant Energy�s ability to implement its strategic plan; the amount of premiums incurred in connection with Alliant Energy�s planneddebt reductions; volatile foreign exchange rates; material declines in the fair market value of, or expected cash flows from, Alliant Energy�sinvestments; Alliant Energy�s ability to continue cost controls and operational efficiencies; Alliant Energy�s ability to identify andsuccessfully complete potential acquisitions and/or development projects; Alliant Energy�s ability to complete its proposed or potentialdivestitures of various businesses and investments, including China, Mexico and New Zealand, on a timely basis and for anticipated proceeds;Alliant Energy�s ability to achieve its dividend payout ratio goal; access to technological developments; employee workforce factors,including changes in key executives, collective bargaining agreements or work stoppages; current or future litigation, regulatoryinvestigations, proceedings or inquiries; the direct or indirect effect resulting from terrorist incidents or responses to such incidents; the effectof accounting pronouncements issued periodically by standard-setting bodies; continued access to the capital markets; the ability to utilize anytax capital losses generated to-date and those that may be generated in the future; the ability to successfully complete ongoing tax audits andappeals with no material impact on Alliant Energy�s earnings and cash flows; inflation and interest rates; and factors listed in �Risk Factors�in Item 1A and �Other Matters - Other Future Considerations.� Alliant Energy assumes no obligation, and disclaims any duty, to update theforward-looking statements in this report.

EXECUTIVE SUMMARY

Description of Business - Alliant Energy is an investor-owned public utility holding company whose first tier subsidiaries include IPL, WPL,Resources and Corporate Services. IPL is a public utility engaged principally in the generation, transmission, distribution and sale of electricenergy; and the purchase, distribution, transportation and sale of natural gas in selective markets in Iowa and Minnesota, as well as the utilityoperations of Illinois properties that Alliant Energy is divesting. WPL is a public utility engaged principally in the generation, distribution andsale of electric energy; and the purchase, distribution, transportation and sale of natural gas in selective markets in Wisconsin, as well as theutility operations of Illinois properties that Alliant Energy is divesting. Resources is the parent company for Alliant Energy�s non-regulatedbusinesses. Corporate Services provides administrative services to Alliant Energy and its subsidiaries.

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Alliant Energy manages three primary businesses as defined below: 1) utility business (IPL and WPL); 2) non-regulated businesses(Resources and subsidiaries); and 3) other.

Utility Business - IPL and WPL own a portfolio of electric generating facilities with a diversified fuel mix including coal, natural gas andrenewable resources. The output from these generating facilities, supplemented with purchased power, is used to provide electric service toapproximately 1 million electric customers in the upper Midwest. The utility business also procures natural gas from various suppliers toprovide service to approximately 400,000 gas customers in the upper Midwest. Alliant Energy�s utility business is its primary source ofearnings and cash flows. The earnings and cash flows from the utility business are sensitive to various external factors including, but notlimited to, the impact of weather on electric and gas sales volumes, the amount and timing of rate relief approved by regulatory authorities andother factors listed in �Forward-Looking Statements.�

Non-regulated Businesses - Resources manages a portfolio of wholly-owned subsidiaries and additional investments through distinctplatforms: Non-regulated Generation (generation projects); International (foreign energy delivery, generation and infrastructure systems inNew Zealand, as well as the remaining generating facilities in China that Alliant Energy is divesting); and other non-regulated investments(includes investments in environmental engineering and site remediation, transportation, construction management services for wind farmsand several other modest investments, as well as a resort development in Mexico and gas pipeline gathering systems that Alliant Energy isdivesting).

Other - includes the operations of Corporate Services as well as Alliant Energy (the parent holding company).

Summary of Historical Results of Operations - Alliant Energy�s earnings per average common share (EPS) were as follows:

2005 2004 2003



Income from continuing operations $0.48 $1.92 $1.50Income (loss) from discontinued operations (0.55) (0.64) 0.37Cumulative effect of changes in accounting principles -- -- (0.06)

Net income (loss) ($0.07) $1.28 $1.81

Additional details regarding Alliant Energy�s net income (loss) were as follows (in millions):

2005 2004 2003Continuing operations:

Utility $251.7 $221.4 $197.2Non-regulated (Resources) (197.7) 4.0 (33.7)Alliant Energy parent and other (primarily taxes, interest and

administrative and general) 2.4 (7.0) (11.8)Income from continuing operations 56.4 218.4 151.7Income (loss) from discontinued operations (64.1) (72.9) 37.8Cumulative effect of changes in accounting principles -- -- (6.0)

Net income (loss) ($7.7) $145.5 $183.5

Higher earnings from Alliant Energy�s utility business in 2005 compared to 2004 were largely due to higher electric margins and $0.08 pershare of earnings from the impact of issues resolved in a federal income tax audit. These items were partially offset by higher generation-related, depreciation and regulatory-related costs. Earnings from continuing operations at Alliant Energy�s non-regulated businesses werelower in 2005 compared to 2004 largely due to pre-tax, non-cash asset valuation charges of $334 million (after-tax charges of $202 million, or$1.73 per share) related to Alliant Energy�s Brazil investments and pre-tax charges of $54 million (after-tax charges of $34 million, or $0.29per share) related to further debt reductions at Resources in 2005. These items were partially offset by improved operating results from AlliantEnergy�s International and other businesses and the reversal of deferred income tax asset valuation allowances in 2005 resulting from achange in Alliant Energy�s anticipated ability to utilize capital losses prior to their expiration. The 2004 non-regulated results included a gainrealized from the sale of Alliant Energy�s remaining interest in Whiting Petroleum Corporation (WPC) and pre-tax charges of $9 million(after-tax charges of $5 million, or $0.05 per share) related to early debt reductions.

In spite of extremely mild weather conditions in 2004, Alliant Energy�s earnings from its utility business were higher in 2004 compared to2003 due to the impact of rate increases, a lower effective income tax rate and weather-normalized sales growth. These items were partiallyoffset by higher other operating expenses, although Alliant Energy was able to mitigate the impact of this to a degree by its comprehensivecost-cutting and operational efficiency efforts. Alliant Energy estimates the extremely mild weather conditions in its utility electric and gasservice territories had a negative impact on its 2004 earnings of approximately $0.18 per share. Earnings from continuing operations at AlliantEnergy�s non-regulated businesses improved in 2004 compared to 2003 primarily due to a $21 million decrease in interest expense, the gainrealized on the sale of Alliant Energy�s remaining interest in WPC in 2004 and lower charges related to early debt reductions.

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Refer to �Alliant Energy Results of Operations,� �IPL Results of Operations� and �WPL Results of Operations� for additional detailsregarding the various factors impacting the respective earnings during 2005, 2004 and 2003.

STRATEGIC OVERVIEW

Summary - Alliant Energy is committed to maintaining sustained, long-term strong financial performance with a strong balance sheet andinvestment grade credit ratings. Alliant Energy�s utility business is expected to provide the majority of Alliant Energy�s earnings and cashflows in the future and the larger share of its long-term earnings growth through investments in new utility generation, by earning returnsauthorized by regulators and by continuing its focus on controlling costs. Alliant Energy is utilizing a comprehensive Lean Six Sigma programto assist it in generating cost savings and operational efficiencies in both its utility and non-regulated businesses.



Utilities as Primary Business Platform - Alliant Energy�s utility business is the dominant growth platform within its strategic plan, and iswhere Alliant Energy expects to invest substantially all of its capital in 2006 and 2007. Refer to �Liquidity and Capital Resources - CashFlows used for Continuing Investing Activities - Construction and Acquisition Expenditures� for additional information. The strategic plan forAlliant Energy�s utility operations is concentrated on: 1) building and maintaining the generation and infrastructure necessary to provideAlliant Energy�s utility customers with safe, reliable and environmentally sound energy service; 2) earning returns authorized by itsregulators; 3) controlling costs to mitigate potential rate increases; and 4) evaluating strategic options for IPL�s transmission assets. Refer to�Transmission Business� and �Utility Business Divestitures� for additional information.

Progressive legislation passed in Iowa and Wisconsin provides companies with the necessary rate making principles - and resulting increasedregulatory and investment certainty - prior to making certain generation investments. These changes have enabled Alliant Energy to pursueadditional generation investments in its utility business to serve its customers and to provide shareowners with greater certainty regarding thereturns on these investments. Refer to �Utility Generation Plan� for additional information.

Focused Approach to Non-regulated Operations - Alliant Energy is committed to streamlining its portfolio of non-regulated businesses to arelatively small portfolio of lower-risk, mature businesses, which are accretive to earnings but not significant users of capital. Consistent withthis strategic focus, Alliant Energy has completed the divestiture of numerous non-regulated businesses in the past three years and is in theprocess of divesting additional non-regulated businesses. Refer to �Non-regulated Business Divestitures� for details of non-regulated assetdivestiture activity in 2005 and to-date in 2006.

Utility Generation Plan - Alliant Energy�s current utility generation plan for the 2006 to 2013 time period reflects the need to increase base-load generation in both Iowa and Wisconsin. The proposed new generation is expected to meet increasing customer demand, reduce relianceon purchased power agreements and mitigate the impacts of potential future plant retirements. Alliant Energy will continue to purchase energyand capacity in the market and intends to remain a net purchaser of both, but at a reduced level assuming the successful completion of thesegeneration projects. The plan also reflects continued commitments to Alliant Energy�s energy efficiency and environmental protectionprograms. Alliant Energy currently expects to add approximately 600 megawatts (MW) of owned-generation between 2006 and 2013, whichincludes approximately 500 MW of clean-coal technology generation (250 MW at IPL in 2013 or 2014 and 250 MW at WPL in 2012) and upto 100 MW of wind generation at WPL in 2007 or 2008. The addition of such generation is expected to require approximately $1.0 billion($450 million for IPL and $550 million for WPL) in capital expenditures, excluding allowance for funds used during construction, from 2006to 2013. WPL�s previous plans to pursue a 500 MW jointly-owned base-load electric plant with Wisconsin Public Service Corporation havechanged and WPL now plans to pursue additional options for its 250 MW of clean-coal technology generation in 2012.

Alliant Energy�s utility generation plan also assumes Alliant Energy will enter into purchased power agreements to add approximately 20anaerobic digesters in each of Iowa and Wisconsin and either own or enter into purchased power agreements to add 350 MW of windgeneration. In July 2005, Alliant Energy announced that it signed a purchased power agreement to proceed with an Iowa-based wind energyfarm to develop up to 150 MW of renewable energy by the end of 2007. Allocation of the energy from the Iowa facility to IPL and WPL willbe determined at a later date. Alliant Energy continues to monitor developments related to state and federal renewable portfolio standards andfederal and state tax incentives. Alliant Energy reviews and updates, as deemed necessary and in accordance with regulatory requirements, itsutility generation requirements and expects to adjust its plans as needed to meet any of these standards or to react to any market factorsincreasing or decreasing the availability or cost effectiveness of the various renewable energy technologies.

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Alliant Energy currently has agreements with Calpine subsidiaries related to the purchase of energy and capacity from the 466 MW RockGenEnergy Center in Christiana, Wisconsin and the 603 MW (Alliant Energy leases 481 MW of this total capacity under its current purchasedpower agreement) Riverside Energy Center in Beloit, Wisconsin and has the option to purchase these two facilities in 2009 and 2013,respectively. Alliant Energy is currently unable to determine what impacts Calpine�s recent bankruptcy filing will have on these twopurchased power agreements. Refer to Note 20 of Alliant Energy�s �Notes to Consolidated Financial Statements� and �Other Matters - OtherFuture Considerations - Calpine Bankruptcy� for additional information.



The 300 MW, simple-cycle, natural gas-fired Sheboygan Falls Energy Facility (SFEF) near Sheboygan Falls, Wisconsin began commercialoperation at the beginning of June 2005, ahead of schedule and under budget. In May 2005, the Public Service Commission of Wisconsin(PSCW) approved the lease of this facility to WPL under the Wisconsin leased generation law. Resources� Non-regulated Generation businessowns SFEF and leases it to WPL for an initial period of 20 years, with an option for two lease renewal periods thereafter. WPL is responsiblefor the operation and fuel supply of SFEF and has exclusive rights to its output. Refer to Note 3(b) of WPL�s �Notes to ConsolidatedFinancial Statements� for further discussion.

Non-regulated Business Divestitures - In January 2006, Alliant Energy completed the sale of all of its Brazil investments to a Brazil-basedinvestor for a sales price of $152 million. Refer to Note 9 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additionalinformation. In the fourth quarter of 2005, Alliant Energy completed the divestitures of its synthetic fuel investment and oil gathering pipelinesystem for a modest amount of proceeds. In the second quarter of 2005, Alliant Energy completed the sale of both Cogenex Corporation, itsenergy services business, and its biomass facility and received net cash proceeds of approximately $35 million.

In July 2005, Alliant Energy announced its intention to divest its interest in 10 generating facilities in China and its investment in Mexico.Alliant Energy divested its interest in three of its facilities in China in 2005 for approximately $34 million in proceeds. Alliant Energy hasentered into sale agreements in 2006 for its interest in five additional facilities for an aggregate purchase price of approximately $88 million.Alliant Energy continues its efforts to divest its interests in its two remaining facilities, which have an aggregate carrying value of less than $5million. Alliant Energy expects to complete all of its China divestitures by the end of the second quarter of 2006. Alliant Energy also expectsto complete the divestiture of its investments in Mexico and two remaining gas gathering pipeline systems no later than September 2006 andJune 2006, respectively. At Dec. 31, 2005, the carrying values of Alliant Energy�s remaining investments in Mexico, China and gas gatheringpipeline systems were approximately $90 million, $87 million and $15 million, respectively.

Alliant Energy is currently evaluating the best use of the expected proceeds from the sales of these businesses. All of these businesses (exceptfor the Brazil and synthetic fuel investments) had been reported as assets held for sale and discontinued operations at Dec. 31, 2005. AlliantEnergy�s Brazil and synthetic fuel investments were accounted for under the equity method of accounting therefore their results are noteligible to be reclassified as discontinued operations. The 2005 results from the Brazil and synthetic investments, including allocated interestexpense and overhead charges, were ($1.70) and $0.05 per share, respectively, and are reflected in Alliant Energy�s consolidated EPS fromcontinuing operations. Refer to Note 16 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information.

In addition to the non-regulated business divestitures discussed above, Alliant Energy continues to evaluate its alternatives to maximize valuefrom its investments in New Zealand. Alliant Energy is a party to certain investment agreements that, in some instances, limit AlliantEnergy�s flexibility to sell its New Zealand investments until early 2007.

Utility Business Divestitures - In January 2006, IPL completed the sale of its 70% ownership interest in the Duane Arnold Energy Center(DAEC) and certain related assets to a subsidiary of FPL Group, Inc. for approximately $329 million in net cash proceeds, subject tocustomary post-closing adjustments. IPL used $130 million of the net proceeds to reduce its short-term debt, $125 million to reduce its levelof accounts receivable sold and the remainder for investments in short-term securities and general corporate purposes. IPL plans to dividend$110 million to Alliant Energy in March 2006 as a result of the DAEC sale. In July 2005, WPL completed the sale of its interest in theKewaunee Nuclear Power Plant (Kewaunee) to a subsidiary of Dominion Resources, Inc. WPL received $75 million at closing, which it usedfor debt reduction. Refer to Notes 17 and 18 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information.

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In June 2005, IPL and WPL each signed separate definitive agreements for the sale of their respective electric and gas distribution propertiesin Illinois for a combined total of approximately $47 million. In June 2005, WPL reached an agreement on the sale of its water utility in SouthBeloit, Illinois for approximately $4 million. Pending all regulatory approvals, these sales are expected to close in 2006. In July 2005, WPLcompleted the sale of its Ripon water utility for approximately $5 million.

As of Dec. 31, 2005, all of these utility businesses have been reported as assets held for sale, and none of them have been reported asdiscontinued operations. Refer to Note 16 of the �Notes to Consolidated Financial Statements� for additional information.



Transmission Business - Alliant Energy continues to monitor developments in the electric transmission industry. As of Dec. 31, 2005,WPL�s investment in American Transmission Co. LLC (ATC) was $152 million, reflecting a 21% ownership interest in the business. IPLcontinues to own its transmission assets, the book value of which was $442 million as of Dec. 31, 2005. Alliant Energy continues to evaluateoptions for participation for its IPL assets in an independent transmission entity, be it ATC or some other entity.

RATES AND REGULATORY MATTERS

Overview - Alliant Energy has two utility subsidiaries, IPL and WPL. WPL has one utility subsidiary, South Beloit Water, Gas and ElectricCompany (South Beloit). Alliant Energy�s utility subsidiaries are currently subject to federal regulation by the Federal Energy RegulatoryCommission (FERC), which has jurisdiction over wholesale electric rates, electric transmission and certain natural gas facilities, and stateregulation in Iowa, Wisconsin, Minnesota and Illinois for retail utility rates and standards of service. Such regulatory oversight also coversIPL�s and WPL�s plans for construction and financing of new generation facilities and related activities.

Recent Utility Rate Case Developments - Details of Alliant Energy�s rate cases impacting its historical and future results of operations areas follows (dollars in millions; Electric (E); Gas (G); Water (W); To Be Determined (TBD); Not Applicable (N/A); Fuel-related (F-R);Q4=fourth quarter):

Expected Return

Interim Interim Final Final Final on

Utility Filing Increase Increase Effective Increase Effective Effective Common

Case Type Date Requested Granted (1) Date Granted (1) Date Date Equity Notes

WPL:

2003 retail E/G/W 5/02 $123 $-- N/A $81 4/03 N/A 12%

2004 retail E/G/W 3/03 87 -- N/A 14 1/04 N/A 12%

2005/2006 retail E/G 9/04 63 N/A N/A 21 7/05 N/A 11.50% (2) (3)

2004 retail (F-R) E 2/04 16 16 3/04 10 10/04 N/A N/A

2004 retail (F-R) E 12/04 9 -- N/A -- N/A N/A N/A (4)

2005 retail (F-R) E 3/05 26 26 4/05 26 7/05 N/A N/A

2005 retail (F-R) E 8/05 96 96 Q4 �05 TBD TBD 5/06 N/A (5)

South Beloit G-9.87%/

retail - IL G/W 10/03 1 N/A N/A 1 10/04 N/A W-9.64%

Wholesale E 3/03 5 5 7/03 5 2/04 N/A N/A

Wholesale E 8/04 12 12 1/05 TBD TBD 3/06 N/A (6)

IPL:

IA retail E 3/02 82 15 7/02 26 5/03 N/A 11.15%

IA retail G 7/02 20 17 10/02 13 8/03 N/A 11.05%

IA retail E 3/04 149 98 6/04 107 2/05 N/A (a)

IA retail G 4/05 19 13 4/05 14 11/05 N/A 10.4%

MN retail E 5/03 5 2 7/03 1 9/04 N/A 11.25%

MN retail E 5/05 5 3 7/05 TBD TBD 3/06 TBD (7)

(a) Emery Generating Station (Emery) - 12.23% and Other - 10.7%

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(1) Interim rate relief is implemented, subject to refund, pending determination of final rates. The final rate relief granted replaces theamount of interim rate relief granted.

(2) The 2005/2006 retail rate case is based on a test period from July 2005 to June 2006.(3) In May 2005, WPL received approval from the PSCW to lease SFEF from Resources� Non-regulated Generation business. The 20-year

lease includes initial monthly lease payments of approximately $1.3 million. WPL�s 2005/2006 retail rate case order, effective in July



2005, included recovery of these initial monthly lease payments. Refer to Note 3(b) of WPL�s �Notes to Consolidated FinancialStatements� for further discussion.

(4) In April 2005, the PSCW issued the final written order denying WPL�s request for a rate increase in this proceeding. In June 2005, thePSCW denied WPL�s request for rehearing. In July 2005, WPL filed a lawsuit in state circuit court challenging the PSCW�s ruling andits interpretation of the fuel rules. In December 2005, the circuit court ruled that the PSCW acted lawfully in denying WPL�s requestedrate increase. WPL has initiated the appeal process of the circuit court�s decision.

(5) In August 2005, WPL filed for a fuel-related rate increase of $41 million with the PSCW and an interim increase of such amount wasgranted and effective in early October 2005. In November 2005, WPL revised its filing to request a $96 million increase as the result ofcontinued increases in fuel-related costs since the initial filing. The PSCW authorized the increase in interim rates to $96 millioneffective in December 2005. Fuel-related costs have decreased in early 2006 which could lead to final rates granted being lower thaninterim rates and a resulting customer refund.

(6) In June 2005, WPL reached a settlement in principle with its wholesale customers for an $8 million annual revenue increase effectiveJan. 1, 2005. The settlement agreement is expected to be filed with FERC in the first quarter of 2006 and final rates will be applied to allservice rendered on and after Jan. 1, 2005. Any amount collected in excess of the final rates will be refunded to customers, with interest,and has been fully reserved at Dec. 31, 2005.

(7) In November 2005, IPL and the Minnesota Department of Commerce filed a settlement agreement in this rate proceeding, whichincludes a $1 million annual rate increase and authorized return on common equity of 10.39%. The settlement agreement is subject toapproval by the Minnesota Public Utilities Commission. Any amount collected in excess of the final rates will be refunded to customers,with interest, and has been fully reserved at Dec. 31, 2005.

With the exception of recovering a return on Emery, which was a large component of IPL�s 2004 retail Iowa electric rate case, and on otheradditions to IPL�s and WPL�s infrastructure, a significant portion of the rate increases included in the above table reflect the recovery ofincreased costs incurred or expected to be incurred by IPL and WPL. The major drivers in WPL�s base rate and fuel-related rate cases for2005 are both fixed and variable fuel and purchased power costs. Thus, the potential increase in revenues related to these rate increase requestsis not expected to result in a material increase in net income. Refer to �Other Matters - Market Risk Sensitive Instruments and Positions -Commodity Price Risk� for further discussion of the impact of increased fuel and purchased power costs on results of operations.

Recent Regulatory-related Legislative Developments - In August 2005, the EPAct 2005 was enacted. In general, the legislation is intendedto improve reliability and market transparency, provide incentives to promote the construction of needed energy infrastructure and fosterdevelopment of a wide range of energy options that promote economic growth and greater energy independence. Among other things, thelegislation provides for shorter recovery periods for certain electric transmission and gas distribution lines, extends the renewable energyproduction tax credit through 2007, provides a seven-year recovery period for certain certified pollution control facilities and provides for therepeal of the Public Utility Holding Company Act of 1935 (PUHCA 1935) and the Public Utility Regulatory Policy Act of 1978. In December2005, FERC issued final rules, effective February 2006, to effectuate the repeal of PUHCA 1935 and FERC�s new authority to regulate publicutility holding companies under the Public Utility Holding Company Act of 2005 (PUHCA 2005) which was enacted as part of the EPAct2005. These rules provide detail on the authority of FERC to address and review various issues, including affiliate transactions, public utilitymergers, acquisitions and dispositions, and books and records requirements. Refer to �Liquidity and Capital Resources - FERC and PublicUtility Holding Company Act (PUHCA) Financing Authority� for discussion of Alliant Energy�s financing authority under PUHCA 2005.

In May 2005, a new law impacting rate making was signed by the Governor in Wisconsin. The new law allows a public utility that proposes topurchase or construct an electric generating facility to apply to the PSCW for an order that specifies in advance the rate making principles thatthe PSCW will apply to the electric generating facility costs in future rate making proceedings. These changes are designed to give Wisconsinutilities more regulatory certainty, including providing utilities with a fixed rate of return on these investments, when financing electricgeneration projects. The new law requires the PSCW to establish rules to administer the requirements of such law. In December 2005, thePSCW issued a proposed final rule which is anticipated to become effective in the first quarter of 2006.

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Other Recent Regulatory Developments -



Utility Fuel Cost Recovery - WPL�s retail electric rates are based on forecasts of forward-looking test year periods and include estimates offuture monthly fuel costs (includes fuel and purchased energy costs) anticipated during the test year. During each electric retail rateproceeding, the PSCW sets fuel monitoring ranges based on the forecasted fuel costs used to determine rates in such proceeding. If WPL�sactual fuel costs fall outside these fuel monitoring ranges during the test year period, the PSCW can authorize an adjustment to future retailelectric rates.

The fuel monitoring ranges set by the PSCW include three different ranges based on monthly costs, annual costs and cumulative costs duringthe test year. In order for WPL to be authorized to file for a proceeding to increase rates related to increased fuel costs during the test yearperiod, WPL must demonstrate first that (1) any actual monthly costs during the test year period exceed the monthly range or (2) the actualcumulative costs to date during the test year period exceed the cumulative range. In addition, the annual projected costs (that includecumulative actual costs) for the test period must also exceed the annual range. Any affected party, including WPL or the PSCW, may initiate aproceeding to decrease rates due to decreases in fuel costs during the test year period based on the same criteria as required for an increase inrates, except the ranges are smaller for decreases than for increases. The PSCW attempts to authorize, after a required hearing, interim fuel-related rate increases within 21 days of notice to customers. Any such change in rates would be effective prospectively and would require arefund with interest at the overall authorized return on common equity if final rates are determined to be lower than interim rates approved.Rate decreases due to decreases in fuel-related costs can be implemented without a hearing. The rules also include a process wherebyWisconsin utilities can seek deferral treatment of emergency changes in fuel-related costs between fuel-related or base rate cases. Suchdeferrals would be subject to review, approval and recovery in future fuel-related or base rate cases.

In February 2006, the PSCW approved the issuance of an order changing WPL�s fuel cost monitoring ranges to plus 8% or minus 2% for themonthly range; plus 2% or minus 0.5% for the annual range; and for the cumulative range, plus 8% or minus 2% for the first month, plus 5%or minus 1.25% for the second month, and plus 2% or minus 0.5% for the remaining months of the monitoring period.

The PSCW has initiated a general docket requesting comments by the affected utilities and other interested parties to be filed by March 3,2006 on whether revisions to the fuel rules are needed and the scope of those proposed changes prior to initiating a formal administrative coderevision proceeding. WPL is working with the PSCW staff, other affected utilities and other interested parties in developing a consensusposition on the scope and details of potential changes.

Coal Delivery Disruption - In July 2005, Alliant Energy announced plans to seek recovery of incremental purchased energy costs associatedwith coal conservation efforts currently underway at IPL and WPL due to coal delivery disruptions. In August 2005, WPL received approvalfrom the PSCW to defer these incremental costs associated with WPL�s retail service, then estimated at $14 million to $22 million. WPLcurrently charges wholesale customers these incremental costs through the fuel adjustment clause. IPL currently recovers these costs throughretail rate adjustments associated with its energy adjustment clause. Refer to Note 1(c) of Alliant Energy�s �Notes to Consolidated FinancialStatements� and �Other Matters - Other Future Considerations - Coal Delivery Disruptions� for further discussion.

Proposed Generating Facility - In June 2005, WPL received approval from the PSCW to defer incremental pre-certification and pre-construction costs as a result of siting and building its proposed base-load power plant discussed in further detail in �Strategic Overview -Utility Generation Plan.�

Reduction in Workforce - In May 2005, Alliant Energy announced plans to reduce certain corporate and operations support positions. Thenet impacts of this reduction in workforce on WPL have been estimated to be minimal in 2005 and to result in a reduction in costs in 2006.Because WPL�s 2005/2006 retail rate case was pending approval at the time of this announcement, and the impacts of this reduction inworkforce were not addressed in this retail rate case, WPL received approval from the PSCW in August 2005 to defer all costs/benefitsincurred/realized by WPL related to the reduction in workforce until its next rate case. The impacts of this reduction in workforce on IPL�sIowa gas operations were incorporated into the settlement proposal for its Iowa retail natural gas rate case, which was approved by the IowaUtilities Board (IUB) in October 2005. The impacts on IPL�s Iowa electric operations will be addressed in its next electric retail rate case filedwith the IUB.

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Kewaunee Outage - WPL received approval from the PSCW to defer incremental fuel-related costs, beginning April 15, 2005, associatedwith the extension of the unplanned outage at Kewaunee prior to its sale in July 2005. Deferral of incremental operation and maintenancecosts related to the unplanned outage was also approved by the PSCW. Refer to Notes 1(c) and 17 of Alliant Energy�s �Notes to ConsolidatedFinancial Statements� for additional information.

MISO - On April 1, 2005, IPL and WPL began participation in the restructured wholesale energy market operated by MISO. Theimplementation of this restructured market marked a significant change in the way IPL and WPL buy and sell wholesale electricity, obtaintransmission services and schedule generation. In March 2005, the PSCW approved the deferral of certain incremental costs incurred by WPLto participate in this market, which will be effective until WPL files its next base rate case with the PSCW. The IUB has approved a temporarywaiver, effective until May 31, 2006, allowing the costs and credits incurred by IPL to participate in this market that relate to its Iowa retailcustomers to be included in IPL�s Iowa energy adjustment clause. IPL will be filing for a two-year extension of this temporary waiver in thefirst quarter of 2006. IPL and WPL are currently working through the regulatory process to establish long-term recovery mechanisms for thesecosts.

Mixed Service Costs - In 2002, IPL filed with the Internal Revenue Service (IRS) for a change in method of accounting for tax purposes for1987 through 2001 that would allow a current deduction related to mixed service costs. Refer to Note 1(c) of Alliant Energy�s �Notes toConsolidated Financial Statements� for updated information regarding this issue.

DAEC Sale - Refer to Note 18 of Alliant Energy�s �Notes to Consolidated Financial Statements� for discussion of regulatory impacts of thegain realized from the sale of IPL�s interest in DAEC in January 2006.

ALLIANT ENERGY RESULTS OF OPERATIONS

Overview - Refer to �Executive Summary� for an overview of Alliant Energy�s 2005, 2004 and 2003 earnings and the various components ofAlliant Energy�s business.

Utility Electric Margins - Electric margins, megawatt-hour (MWh) sales and cooling degree day data for Alliant Energy were as follows:Revenues and Costs (in millions) MWhs Sold (in thousands)

2005 2004 * 2003 ** 2005 2004 * 2003 **Residential $823.4

$716.715% $684.6 5% 7,881 7,354 7% 7,565 (3%)

Commercial 497.4 437.8 14% 409.7 7% 6,110 5,702 7% 5,663 1%Industrial 675.2 609.9 11% 571.6 7% 12,830 12,596 2% 12,345 2%

Total from retailcustomers 1,996.0 1,764.4 13% 1,665.9 6% 26,821 25,652 5% 25,573 --

Sales for resale 273.3 185.8 47% 195.8 (5%) 6,094 5,102 19% 5,495 (7%)Other 51.3 58.8 (13%) 55.4 6% 173 178 (3%) 184 (3%)

Total revenues/sales 2,320.6 2,009.0 16% 1,917.1 5% 33,088 30,932 7% 31,252 (1%)Electric production

fuel and purchasedpower expense 1,009.3 747.4 35% 730.6 2%

Margins $1,311.3 $1,261.6 4% $1,186.5 6%* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.

Actual

Cooling degree days*: 2005 2004 2003 NormalCedar Rapids (IPL) 406 139 276 379Madison (WPL) 421 138 224 242

* Cooling degree days are calculated using a 70 degree base. Normal degree days are calculated using a fixed 30-year



average most recently updated in February 2002.

Electric margins increased $50 million, or 4%, in 2005, primarily due to the impact of various rate increases implemented in 2005 and 2004,warmer weather conditions in 2005 compared to the mild weather in 2004, a 2% increase in weather-normalized sales in 2005 and $5 millionof higher energy conservation revenues at IPL. These items were partially offset by the impact of higher purchased power capacity costs of$49 million at WPL, higher than anticipated fuel and purchased power energy costs at WPL and $9 million of charges incurred in 2005 relatedto IPL�s and WPL�s electric weather derivatives. The higher energy conservation revenues were largely offset by higher energy conservationexpenses. Refer to Note 10(b) Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information regarding the electricweather derivatives.

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The higher purchased power capacity costs were largely due to the Kewaunee and Riverside agreements which began in July 2005 and June2004, respectively. $30 million of this increase was related to the Kewaunee agreement but this was substantially offset by lower otheroperation and maintenance and depreciation expenses. WPL�s increase in fuel and purchased power energy costs was largely a result of anescalation in natural gas costs, an unplanned outage at Kewaunee during 2005 and the impact of coal supply constraints from the PowderRiver Basin in 2005. WPL estimates that the under-recovered portion of retail fuel and purchased power energy costs reduced its electricmargins in 2005 by approximately $40 million. Refer to �Other Matters - Market Risk Sensitive Instruments and Positions - Commodity PriceRisk� for discussion of risks associated with increased fuel and purchased power costs on WPL�s electric margins. Refer to Note 17 of AlliantEnergy�s �Notes to Consolidated Financial Statements� for additional information regarding the sale of WPL�s interest in Kewaunee.

Before giving consideration to the aforementioned impact of the electric weather derivatives, Alliant Energy estimates that warmer thannormal weather conditions had a positive impact of approximately $12 million on its electric margins in 2005 compared to normal weather.Alliant Energy estimates the mild weather conditions had a negative impact of approximately $34 million on its electric utility margins in2004 compared to normal weather.

Sales for resale revenues increased in 2005 compared to 2004 primarily due to the impacts of higher fuel cost recovery revenues fromwholesale customers at WPL and the implementation of the restructured wholesale energy market operated by MISO on April 1, 2005. Theseincreased revenues were largely offset by increased electric production fuel and purchased power expense and therefore did not have asignificant impact on electric margins.

Electric margins increased $75 million, or 6%, in 2004, primarily due to the impact of various rate increases implemented in 2004 and 2003,which included increased revenues to recover a significant portion of higher utility operating expenses, an approximate 2% increase inweather-normalized sales and lower purchased power capacity costs at IPL. This sales growth included an increase of 2% in industrial sales,reflecting improving economic conditions in Alliant Energy�s utility service territories. These items were partially offset by the impact of theextremely mild weather in 2004, $8 million of lower energy conservation revenues and the effect of WPL implementing seasonal rates for thefirst time in April 2003. Alliant Energy estimates the impact of weather had a negative impact of approximately $9 million on its electricutility margins in 2003 compared to normal weather. The reduced energy conservation revenues were largely offset by lower energyconservation expenses.

In April 2003, WPL implemented seasonal electric rates that are designed to result in higher rates for the peak demand period from June 1through Sep. 30 and lower rates in all other periods during each calendar year. As a result, total annual revenues are not expected to beimpacted significantly. However, given the seasonal rates were not yet effective in the first quarter of 2003, the impact of seasonal ratesincreased the 2003 electric margins by approximately $6 million compared to 2004.

Utility Gas Margins - Gas margins, dekatherm (Dth) sales and heating degree day data for Alliant Energy were as follows:

Revenues and Costs (in millions) Dths Sold (in thousands)2005 2004 * 2003 ** 2005 2004 * 2003 **



Residential $358.1 $315.6 13% $310.7 2% 28,55429,338

(3%) 31,871 (8%)

Commercial 202.0 172.3 17% 162.7 6% 18,763 19,199 (2%) 19,947 (4%)Industrial 43.8 38.4 14% 34.2 12% 4,406 5,127 (14%) 5,093 1%Transportation/other 81.2 43.5 87% 59.3 (27%) 62,850 49,626 27% 48,978 1%

Total revenues/sales 685.1 569.8 20% 566.9 1% 114,573 103,290 11% 105,889 (2%)Cost of gas sold 504.6 396.9 27% 396.1 --

Margins $180.5 $172.9 4% $170.8 1%* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.

ActualHeating degree days*: 2005 2004 2003 Normal

Cedar Rapids (IPL) 6,534 6,463 6,883 6,899Madison (WPL) 6,796 6,831 7,337 7,485

* Heating degree days are calculated using a 65 degree base. Normal degree days are calculated using a fixed 30-yearaverage most recently updated in February 2002.

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Gas revenues and cost of gas sold were significantly higher in 2005 compared to 2004 primarily due to increased natural gas prices. Due toAlliant Energy�s rate recovery mechanisms for gas costs, these price differences alone had little impact on gas margins. Gas marginsincreased $7.6 million, or 4%, in 2005, primarily due to the impact of rate increases implemented in 2005 and 2004, $3 million of improvedresults from WPL�s performance-based gas cost recovery program (benefits are shared by ratepayers and shareowners), the impact of highertransportation/other sales volumes at WPL and continued customer growth. These increases were partially offset by the negative impact highgas prices in the fourth quarter of 2005 had on gas sales during that period. Industrial sales volume decreases in 2005 were primarily due to areduction in agricultural demand attributable to drier weather conditions during the fall harvest in 2005 and the impact of increases in naturalgas prices. Transportation/other sales volumes increased in 2005 due to greater demand from natural gas-fired electric generating facilities,including Riverside and SFEF being placed in service in June 2004 and June 2005, respectively. The impact of these higher transportation/other sales increased gas margins at WPL by approximately $3 million in 2005.

Gas margins increased $2.1 million, or 1%, in 2004, primarily due to improved results of $4 million from WPL�s performance-based gascommodity cost recovery program, partially offset by lower sales due to milder weather conditions in 2004 compared to 2003.

Refer to �Rates and Regulatory Matters� for discussion of various electric and gas rate filings. Refer to �Rates and Regulatory Matters� andNote 1(i) of Alliant Energy�s �Notes to Consolidated Financial Statements� for information relating to utility fuel and natural gas costrecovery.

Utility Other Revenues - Other revenues for the utilities decreased $5.0 million and $14 million in 2005 and 2004, respectively, primarilydue to lower construction management revenues from Alliant Energy�s WindConnect� program, resulting from decreased demand. Theserevenue variances were largely offset by lower operation and maintenance expenses.

Non-regulated Revenues - Details regarding Alliant Energy�s non-regulated revenues were as follows (in millions):

2005 2004 2003Environmental engineering and site remediation $92

$85$90

WindConnectTM 44 -- --Non-regulated Generation 28 25 24



Transportation 26 23 20Other (includes eliminations) (2) 2 4

$188 $135 $138

The 2005 WindConnect� revenues were primarily due to a large construction management project for a wind farm outside of Alliant Energy�sutility service territory that began in 2005. The increased revenues were largely offset by higher operation and maintenance expenses.

Other Operating Expenses - Other operation and maintenance expenses for the utilities decreased $8.7 million in 2005, primarily due tolower nuclear generation-related, WindConnect� and incentive compensation expenses in 2005. These decreases were partially offset byhigher fossil-fuel generation-related expenses, a regulatory-related charge recorded in 2005 by WPL, $7 million of higher energy conservationexpenses at IPL and $4 million of employee separation expenses incurred by IPL in 2005 related to the elimination of certain corporate andoperations support positions. IPL estimates that the elimination of the corporate and operations support positions will decrease its futureannual operating expenses by approximately $7 million. The lower nuclear generation-related expenses were primarily due to WPL�s sale ofits interest in Kewaunee in July 2005. In the second half of 2004, WPL incurred approximately $26 million of other operation andmaintenance expenses related to Kewaunee that have been replaced with Kewaunee�s purchased power capacity costs included in WPL�selectric margins in the second half of 2005. Refer to Note 17 of Alliant Energy�s �Notes to Consolidated Financial Statements� for furtherdiscussion of the Kewaunee sale and �Rates and Regulatory Matters� for the impact of the workforce reduction and the associated regulatorytreatment.

Other operation and maintenance expenses for the utilities increased $5.4 million in 2004, primarily due to increases in employee and retireebenefits (comprised of compensation, medical and pension costs) and other administrative and general expenses. These items were largelyoffset by the impact of comprehensive cost-cutting and operational efficiency efforts, lower energy conservation expenses and $10 million oflower expenses for WindConnect�.

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Non-regulated operation and maintenance expenses were as follows (in millions):

2005 2004 2003Environmental engineering and site remediation $84 $78 $79WindConnectTM 42 -- --Non-regulated Generation 14 12 14Transportation 13 12 12International 9 10 5Other (includes eliminations) 8 16 19

$170 $128 $129

The WindConnect� variance was largely driven by the same factors impacting the revenue variance discussed previously. In 2003, charges of$3.5 million were included in Non-regulated Generation for cancelled contracts and generation projects. The International expenses in 2005and 2004 were higher than in 2003 due to litigation-related expenses incurred defending Alliant Energy�s shareholder rights in Brazil. TheOther decrease in 2005 was largely driven by increased intercompany eliminations and lower incentive compensation expenses.

Depreciation and amortization expense increased $3.4 million and $30 million in 2005 and 2004, respectively. The 2005 increase wasprimarily due to property additions, including Emery and SFEF being placed in service in May 2004 and June 2005, respectively. These itemswere partially offset by lower Kewaunee depreciation as a result of the sale in July 2005 and lower software amortization. The 2004 increasewas primarily due to utility property additions, including Emery, and the implementation of higher depreciation rates at IPL on Jan. 1, 2004resulting from an updated depreciation study. Refer to �Other Matters - Other Future Considerations - Depreciation Study� for details onIPL�s most recent depreciation study.



Taxes other than income taxes increased $11 million in 2004, primarily due to higher property taxes at IPL related to a 2003 property taxsettlement and expiration of provisions which required additional payments in the early years of revised property tax regulations in Iowa. The2004 increase also was due to increased gross receipts taxes at WPL.

Refer to �Rates and Regulatory Matters� for discussion of the interplay between utility operating expenses and utility margins given theirimpact on Alliant Energy�s utility rate activities.

Interest Expense and Other - Interest expense decreased $1.1 million and $28 million in 2005 and 2004, respectively. The 2005 decreasewas primarily due to lower interest expense resulting from Resources� retirement of senior notes in 2005 and 2004. This was largely offset byinterest expense from the issuance of debt by Sheboygan Power LLC and Resources� wholly-owned New Zealand subsidiary in 2005 and2004, $5 million of interest expense at Resources in 2005 related to the impact of a federal income tax audit and a $2 million reduction in theamount of capitalized interest related to the construction of SFEF. The 2004 decrease was primarily due to a $21 million decrease in interestexpense at Alliant Energy�s non-regulated businesses resulting from lower average borrowings as a result of debt retirements during 2003 and2004 (largely from the use of asset sale proceeds), $6 million of credit facility fees incurred during the first half of 2003 and the capitalizationof $5 million of interest in 2004 related to the construction of SFEF. The 2004 decrease was also due to the impact of additional equity issuedby Alliant Energy during 2003 and 2004 and various debt refinancings. Refer to Note 8(b) of Alliant Energy�s �Notes to ConsolidatedFinancial Statements� for additional information on the debt retirements and the associated losses incurred on the early extinguishment ofdebt.

Refer to Note 9 of Alliant Energy�s �Notes to Consolidated Financial Statements� for a breakdown of Alliant Energy�s equity (income) lossfrom unconsolidated investments and a discussion of the sales of Alliant Energy�s investments in Brazil and its synthetic fuel processingfacility in the first quarter of 2006 and fourth quarter of 2005, respectively. The higher equity income from ATC in 2005 and 2004 was largelydue to rate increases at ATC. The improved results from TrustPower Ltd. (TrustPower) during 2005 and 2004 were primarily due to highermargins as a result of increased energy prices. The higher equity earnings from Alliant Energy�s Brazil investments in 2005 and 2004 wereprimarily due to the impact of rate increases implemented at the Brazilian operating companies, partially offset by higher interest and otheroperating expenses. The Brazil and TrustPower results do not include Alliant Energy�s allocated debt capital and overhead charges. TheBrazil results also do not include the non-cash asset valuation charges Alliant Energy recorded in 2005.

Allowance for funds used during construction (AFUDC) was significantly higher in 2004 and 2003 compared to 2005, primarily due to theconstruction of Emery in 2004 and 2003.

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Interest income and other decreased $12 million and increased $18 million in 2005 and 2004, respectively, primarily due to a pre-tax gain of$14 million from the sale of Alliant Energy�s remaining interest in WPC in 2004. The 2005 decrease was also due to lower interest income onloans to discontinued operations, partially offset by $5 million of interest income in 2005 related to a federal income tax audit. Refer to Note1(p) of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information.

Income Taxes - The effective income tax rate for 2005 was not meaningful given the small amount of income from continuing operationsbefore income taxes, combined with the impact tax credits and permanent tax deductions have on the effective tax rate calculation. Excludingthe impacts of these charges, the effective income tax rates for Alliant Energy�s continuing operations were 22.2%, 27.8% and 31.0% in 2005,2004 and 2003, respectively. The lower effective income tax rate for 2005 compared to 2004 was primarily due to the impact of reversing $13million of deferred tax asset valuation allowances originally recorded prior to 2005 related to a change in Alliant Energy�s anticipated abilityto utilize capital losses prior to their expiration and $7.4 million of tax benefits related to the impact of issues resolved in a federal income taxaudit. These items were partially offset by the impacts of bonus depreciation deductions in 2004 as described below. The lower effectiveincome tax rate for 2004 compared to 2003 was primarily due to the impact of legislation passed in Iowa in late 2004 related to additionalbonus depreciation tax deductions IPL was allowed to take in 2003 and 2004 under the provisions of the new legislation and differences inproperty-related temporary differences for which deferred tax expense is not recorded pursuant to Iowa rate making principles. Refer to Note 5of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information regarding its effective income tax rates.



Income (Loss) from Discontinued Operations - Refer to Note 16 of Alliant Energy�s �Notes to Consolidated Financial Statements� fordiscussion of Alliant Energy�s discontinued operations.

Cumulative Effect of Changes in Accounting Principles - In 2003, Alliant Energy recorded after-tax charges of $3.9 million and $2.1million for the cumulative effect of changes in accounting principles related to the adoption on Jan. 1, 2003 of Statement of FinancialAccounting Standards (SFAS) 143, �Accounting for Asset Retirement Obligations,� and Emerging Issues Task Force Issue 02-3, �IssuesRelated to Accounting for Contracts Involved in Energy Trading and Risk Management Activities,� within WPC and NG Energy Trading,LLC, respectively. Alliant Energy has subsequently divested both of these businesses.

IPL RESULTS OF OPERATIONS

Overview - Earnings available for common stock increased $39 million in 2005 and $23 million in 2004. The 2005 increase was primarilydue to higher electric margins, partially offset by increased operating expenses and lower AFUDC. The 2004 increase was primarily due tohigher electric margins and a lower effective income tax rate, partially offset by increased operating expenses.

Electric Margins - Electric margins and MWh sales for IPL were as follows:

Revenues and Costs (in millions) MWhs Sold (in thousands)2005 2004 * 2003 ** 2005 2004 * 2003 **

Residential $453.9 $388.9 17% $367.7 6% 4,282 3,979 8% 4,155 (4%)Commercial 300.0 257.8 16% 239.4 8% 3,836 3,487 10% 3,496 --Industrial 387.0 347.3 11% 327.8 6% 8,005 7,827 2% 7,750 1%

Total from retailcustomers 1,140.9 994.0 15% 934.9 6% 16,123 15,293 5% 15,401 (1%)

Sales for resale 75.4 41.7 81% 40.2 4% 1,723 1,305 32% 1,299 --Other 30.4 33.5 (9%) 31.9 5% 98 98 -- 102 (4%)

Total revenues/sales 1,246.7 1,069.2 17% 1,007.0 6% 17,944 16,696 7% 16,802 (1%)Electric production

fuel and purchasedpower expense 408.5 315.9 29% 320.9 (2%)

Margins $838.2 $753.3 11% $686.1 10%* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.Refer to �Alliant Energy Results of Operations - Utility Electric Margins� for IPL�s cooling degree day data.

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Electric margins increased $85 million, or 11%, in 2005, primarily due to the impact of rate increases implemented in 2005 and 2004, warmerweather conditions in 2005 compared to the mild weather in 2004, a 2% increase in weather-normalized sales in 2005 and $5 million of higherenergy conservation revenues. These increases were partially offset by $5.5 million of charges incurred in 2005 related to IPL�s electricweather derivative. Before giving consideration to the aforementioned impact of the electric weather derivative, IPL estimates that warmerthan normal weather conditions had a positive impact of approximately $5 million on its electric margin in 2005 compared to normal weather.Alliant Energy estimates the impact of weather reduced electric margins by approximately $24 million in 2004 compared to normal weather.The higher energy conservation revenues were largely offset by higher energy conservation expenses. Refer to Note 10(b) of Alliant Energy�s�Notes to Consolidated Financial Statements� for additional information regarding the electric weather derivative. Refer to �Alliant EnergyResults of Operations� for discussion of the impact of MISO-related transactions on IPL�s electric margins.

Electric margins increased $67 million, or 10%, in 2004, primarily due to the impact of rate increases implemented in 2004 and 2003, whichincluded increased revenues to recover a significant portion of higher operating expenses, weather-normalized sales growth includingincreased industrial sales which reflects improving economic conditions in IPL�s service territory and lower purchased power capacity costs.



These items were partially offset by the impact of the extremely mild weather conditions as cooling degree days in Cedar Rapids were 63%below normal in 2004. Alliant Energy estimates that mild weather conditions reduced electric margins by approximately $6 million in 2003compared to normal weather.

Gas Margins - Gas margins and Dth sales for IPL were as follows:


Residential $201.7 $179.2 13% $173.6 3% 16,486 16,882 (2%) 19,074 (11%)Commercial 112.7 95.5 18% 88.1 8% 10,576 10,614 -- 11,408 (7%)Industrial 33.8 30.3 12% 24.6 23% 3,428 4,029 (15%) 3,911 3%Transportation/other 14.6 11.0 33% 8.2 34% 31,202 28,942 8% 29,182 (1%)

Total revenues/sales 362.8 316.0 15% 294.5 7% 61,692 60,467 2% 63,575 (5%)Cost of gas sold 272.7 231.1 18% 209.8 10%

Margins $90.1 $84.9 6% $84.7 --* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.Refer to �Alliant Energy Results of Operations - Utility Gas Margins� for IPL�s heating degree day data.

Gas revenues and cost of gas sold were higher during 2005 compared to 2004 primarily due to increased natural gas prices. These increasesalone had little impact on IPL�s gas margins given its rate recovery mechanism for gas costs. Gas margins increased $5.2 million, or 6%, in2005, primarily due to the impact of a rate increase implemented in April 2005, $2 million of higher energy conservation revenues andcontinued customer growth, partially offset by the negative impact high gas prices in the fourth quarter of 2005 had on gas sales during thatperiod. Industrial sales volume decreases in 2005 reflect a reduction in agricultural demand attributable to drier weather conditions during thefall harvest in 2005 and the impact of increases in natural gas prices. The higher energy conservation revenues were largely offset by higherenergy conservation expenses.


Steam and Other Revenues - Steam and other revenues decreased $2.2 million in 2005, primarily due to lower construction managementrevenues from WindConnect�, resulting from decreased demand, partially offset by higher steam revenues required to recover increased costsof steam production fuels. These revenue variances were largely offset by variances in other operation and maintenance expenses.

Other Operating Expenses - Other operation and maintenance expenses increased $13 million in 2005, primarily due to $8 million of highergeneration-related expenses, $7 million of higher energy conservation expenses, higher steam production fuel costs and $4 million ofemployee separation expenses incurred in 2005 related to the elimination of certain corporate and operations support positions. These itemswere partially offset by lower WindConnect� and incentive compensation expenses in 2005. IPL estimates that the elimination of thecorporate and operations support positions will decrease future annual operating expenses by approximately $7 million. Refer to �Rates andRegulatory Matters - Other Recent Regulatory Developments - Reduction in Workforce� for further discussion of the impact of the workforcereduction and the associated regulatory treatment. Other operation and maintenance expenses increased $20 million in 2004 primarily due toincreases in employee and retiree benefits (comprised of compensation, medical and pension costs) and other administrative and generalexpenses, partially offset by the impact of comprehensive cost-cutting and operational efficiency efforts.

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Depreciation and amortization expense increased $8.5 million in 2005, primarily due to property additions, including Emery being placed inservice in May 2004, partially offset by lower software amortization. Depreciation and amortization expense increased $25 million in 2004,primarily due to property additions, including Emery, and the implementation of higher depreciation rates on Jan. 1, 2004 resulting from an



updated depreciation study. Refer to �Other Matters - Other Future Considerations - Depreciation Study� for details on IPL�s most recentdepreciation study. Taxes other than income taxes increased $2.4 million and $6.7 million in 2005 and 2004, respectively, due to increasedproperty taxes.

Refer to �Rates and Regulatory Matters� for discussion of the interplay between utility operating expenses and utility margins given theirimpact on IPL�s utility rate activities. Refer to Note 18 of Alliant Energy�s �Notes to Consolidated Financial Statements� for information onthe sale of IPL�s interest in DAEC.

Interest Expense and Other - Interest expense increased $2.5 million in 2004 due to higher average borrowings outstanding, primarily due tofinancing a portion of the construction costs of Emery. AFUDC was significantly higher in 2004 and 2003 compared to 2005 primarily due tothe construction of Emery in 2004 and 2003.

Income Taxes - The effective income tax rates were 32.9%, 32.9% and 41.5% in 2005, 2004 and 2003, respectively. The effective tax rate for2005 includes $7.5 million of tax benefits recorded by IPL related to the impact of issues resolved in a federal income tax audit. The lowereffective income tax rate for 2004 compared to 2003 was primarily due to the impact of legislation passed in Iowa in late 2004 related toadditional bonus depreciation tax deductions IPL was allowed to take in 2003 and 2004 under the provisions of the new legislation anddifferences in property-related temporary differences for which deferred tax expense is not recorded pursuant to Iowa rate making principles.Refer to Note 5 of IPL�s �Notes to Consolidated Financial Statements� for additional information regarding its effective income tax rates.

WPL RESULTS OF OPERATIONS

Overview - WPL�s earnings available for common stock decreased $8.6 million in 2005 and $1.2 million in 2004. The 2005 decrease wasprimarily due to lower electric margins and higher interest expense, partially offset by decreased operating expenses. The 2004 decrease wasprimarily due to increased operating expenses, largely offset by higher electric margins.

Electric Margins - Electric margins and MWh sales for WPL were as follows:

Revenues and Costs (in millions) MWhs Sold (in thousands)2005 2004 * 2003 ** 2005 2004 * 2003 **

Residential $369.5 $327.8 13% $316.9 3% 3,599 3,375 7% 3,410 (1%)Commercial 197.4 180.0 10% 170.3 6% 2,274 2,215 3% 2,167 2%Industrial 288.2 262.6 10% 243.8 8% 4,825 4,769 1% 4,595 4%

Total from retailcustomers 855.1 770.4 11% 731.0 5% 10,698 10,359 3% 10,172 2%

Sales for resale 197.9 144.1 37% 155.6 (7%) 4,371 3,797 15% 4,196 (10%)Other 20.9 25.3 (17%) 23.5 8% 75 80 (6%) 82 (2%)

Total revenues/sales 1,073.9 939.8 14% 910.1 3% 15,144 14,236 6% 14,450 (1%)Electric production

fuel and purchasedpower expense 600.8 431.5 39% 409.7 5%

Margins $473.1 $508.3 (7%) $500.4 2%* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.Refer to �Alliant Energy Results of Operations - Utility Electric Margins� for WPL�s cooling degree day data.

Electric margins decreased $35 million, or 7%, in 2005, largely due to the impact of higher purchased power capacity costs of $49 million,higher than anticipated fuel and purchased power energy costs and $3.5 million of charges incurred in 2005 related to WPL�s electric weatherderivative. These items were partially offset by the impact of rate increases implemented in 2005 and 2004, warmer weather conditions in2005 compared to the mild weather in 2004, and a 2% increase in weather-normalized sales in 2005. Before giving consideration to theaforementioned impact of the electric weather derivative, WPL estimates that warmer than normal weather conditions had a positive impact of



approximately $7 million on its electric margin in 2005 compared to normal weather. WPL estimates the impact of weather reduced electricmargins by approximately $10 million in 2004 compared to normal weather.

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Refer to �Alliant Energy Results of Operations� for further discussion of WPL�s increased fuel and purchased power costs, and the impacts ofhigher fuel cost recovery revenues from wholesale customers and MISO-related transactions on WPL�s electric margins. Refer to Notes 10(b)and 17 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information regarding the electric weather derivativesand sale of WPL�s interest in Kewaunee, respectively.

Electric margins increased $7.9 million, or 2%, in 2004, primarily due to the impact of various rate increases in 2004 and 2003, whichincluded increased revenues to recover a significant portion of higher operating expenses, and weather-normalized sales growth of 3%,including increased industrial sales of 4% which reflects improving economic conditions in WPL�s service territory. These items werepartially offset by the impact of the extremely mild weather conditions in 2004, $9 million of lower energy conservation revenues and theeffect of implementing seasonal rates in 2003. Cooling degree days in Madison were 43% below normal in 2004. Alliant Energy estimates thatmild weather conditions reduced electric margins by approximately $3 million in 2003 compared to normal weather. The reduced energyconservation revenues were largely offset by lower energy conservation expenses.

Gas Margins - Gas margins and Dth sales for WPL were as follows:


Residential $156.4 $136.4 15% $137.1 (1%) 12,068 12,456 (3%) 12,797 (3%)Commercial 89.3 76.8 16% 74.6 3% 8,187 8,585 (5%) 8,539 1%Industrial 10.0 8.1 23% 9.6 (16%) 978 1,098 (11%) 1,182 (7%)Transportation/other 66.6 32.5 105% 51.1 (36%) 31,648 20,684 53% 19,796 4%

Total revenues/sales 322.3 253.8 27% 272.4 (7%) 52,881 42,823 23% 42,314 1%Cost of gas sold 231.9 165.8 40% 186.3 (11%)

Margins $90.4 $88.0 3% $86.1 2%* Reflects the % change from 2004 to 2005. ** Reflects the % change from 2003 to 2004.Refer to �Alliant Energy Results of Operations - Utility Gas Margins� for WPL�s heating degree day data.

Gas revenues and cost of gas sold were significantly higher in 2005 compared to 2004 due to increased natural gas prices. These increasesalone had little impact on WPL�s gas margins given its rate recovery mechanism for gas costs. Gas margins increased $2.4 million, or 3%, in2005, primarily due to $3 million of improved results from WPL�s performance-based gas cost recovery program (benefits are shared byratepayers and shareowners), the impact on margins from higher transportation/other sales and continued customer growth. These items werepartially offset by the negative impact high gas prices in the fourth quarter of 2005 had on gas sales during that period. Industrial sales volumedecreases in 2005 reflect a reduction in agricultural demand attributable to drier weather conditions during the fall harvest in 2005 and theimpact of increases in natural gas prices. Transportation/other sales increased in 2005 due to greater demand from natural gas-fired electricgenerating facilities, including Riverside and SFEF being placed in service in June 2004 and June 2005, respectively. The impact of thesehigher transportation/other sales increased gas margins by approximately $3 million in 2005.

Gas margins increased $1.9 million, or 2%, in 2004, primarily due to improved results of $4 million from WPL�s performance-based gascommodity cost recovery program, partially offset by lower sales to retail customers due to milder weather conditions in 2004 compared to2003.




Other Revenues - Other revenues decreased $18 million in 2004 primarily due to lower construction management revenues fromWindConnect� due to decreased demand. This decrease was largely offset by lower operating expenses related to this business.

Other Operating Expenses - Other operation and maintenance expenses decreased $23 million in 2005, primarily due to lower nucleargeneration, incentive compensation and transmission and distribution expenses in 2005. These items were partially offset by a regulatory-related charge recorded in 2005 and higher fossil-fuel generation expenses. The lower nuclear generation-related expenses were primarily dueto WPL�s sale of its interest in Kewaunee in July 2005. In the second half of 2004, WPL incurred approximately $26 million of otheroperation and maintenance expenses related to Kewaunee that have been replaced with Kewaunee�s purchased power capacity costs includedin WPL�s electric margins in the second half of 2005. Other operation and maintenance expenses decreased $11 million in 2004, primarilydue to $11 million of lower expenses for WindConnect�, lower energy conservation expenses and the impact of comprehensive cost-cuttingand operational efficiency efforts. These items were partially offset by increases in employee and retiree benefits (comprised of compensation,medical and pension costs).

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Depreciation and amortization expense decreased $3.1 million in 2005, primarily due to lower nuclear depreciation as a result of theKewaunee sale in July 2005 and lower software amortization, partially offset by the impact of property additions including SFEF.Depreciation and amortization increased $6.1 million in 2004, primarily due to property additions. Taxes other than income taxes increased$4.7 million in 2004, primarily due to increased gross receipts taxes.

Refer to �Rates and Regulatory Matters� for discussion of the interplay between utility operating expenses and utility margins given theirimpact on WPL�s utility rate activities. Refer to Note 17 of Alliant Energy�s �Notes to Consolidated Financial Statements� for furtherdiscussion of the Kewaunee sale.

Interest Expense and Other - Interest expense increased $6.9 million and decreased $4.4 million for 2005 and 2004, respectively. The 2005increase was primarily due to affiliated interest expense associated with the SFEF capital lease. Refer to Note 3(b) of WPL�s �Notes toConsolidated Financial Statements� for additional information on this capital lease. The 2004 decrease was primarily due to lower averageborrowings outstanding. Equity income from unconsolidated investments increased $1.3 million and $4.3 million for 2005 and 2004,respectively, primarily due to higher earnings at ATC resulting from rate increases.

Income Taxes - The effective income tax rates were 36.7%, 36.8%, and 36.4% in 2005, 2004 and 2003, respectively. Refer to Note 5 ofWPL�s �Notes to Consolidated Financial Statements� for additional information.

LIQUIDITY AND CAPITAL RESOURCES

Overview - Alliant Energy believes it has a strong liquidity position and expects to maintain this position over its planning period of 2006 to2010 as a result of its available capacity under its revolving credit facilities, operating cash flows from its utility business, proceeds from assetsales and its remaining balance of available cash and temporary cash investments. Based on its strong liquidity position and capital structure,Alliant Energy believes it will be able to secure additional capital required to implement its strategic plan through the 2006 to 2010 planningperiod. Alliant Energy believes its ability to secure additional capital has been significantly enhanced by its actions during the last severalyears to rebalance its business portfolio in favor of its regulated utilities and strengthen its balance sheet as is evidenced by, among otheritems, its current debt-to-total capitalization ratio of 47% compared to 61% in early 2003.

Alliant Energy continually reviews its capital structure and plans to maintain an adjusted consolidated debt-to-total capitalization ratioconsistent with an investment grade credit rating. Important capital structure considerations include financing flexibility for the generationgrowth plans discussed in �Strategic Overview,� debt imputed by rating agencies and state regulations. The most stringent imputationsinclude attributed debt for a portion of the RockGen and Riverside long-term capacity agreements and the Kewaunee and DAEC long-termpurchased power agreements.



Primary Sources and Uses of Cash - Alliant Energy�s most significant source of cash is electric and gas sales to its utility customers. Cashfrom these sales reimburse Alliant Energy for prudently incurred expenses to provide service to its utility customers and provides AlliantEnergy a return on the rate base assets required to provide such services. Utility operating cash flows are expected to substantially coverAlliant Energy�s utility maintenance capital expenditures and dividends paid to Alliant Energy�s shareowners. The capital requirementsneeded to retire debt and pay capital expenditures associated with growing the rate base at its utilities, including new generation plants, areexpected to be financed primarily through external financings and proceeds from asset divestitures, supplemented by internally generatedfunds. In order to maintain its planned consolidated capitalization ratios, Alliant Energy may periodically issue additional debt and equity tofund such capital requirements.

Cash and Temporary Cash Investments - At Dec. 31, 2005, Alliant Energy and its subsidiaries had approximately $205 million of cash andtemporary cash investments. Alliant Energy plans to use a majority of this cash balance to retire additional senior notes at Resources in thefirst quarter of 2006. Alliant Energy repatriated approximately $72 million of cash from its China business in 2005 under the provisions of theAmerican Jobs Creation Act passed in 2004 and through the sale of a portion of its China assets.

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Cash Flows - Selected information for continuing operations from Alliant Energy�s, IPL�s and WPL�s Consolidated Statements of CashFlows was as follows (in millions):

Alliant Energy IPL WPLCash flows from (used for): 2005 2004 2003 2005 2004 2003 2005 2004 2003

Operating activities $600.2 $498.2 $438.6 $332.0 $347.6 $322.4 $176.6 $199.3 $138.5Investing activities (288.9) (634.5) (268.8) (308.0) (369.7) (532.6) (42.9) (214.3) (108.4)Financing activities (308.4) 159.3 (10.2) (23.4) 20.1 206.2 (133.8) (12.0) (11.6)

Cash Flows from Continuing Operating Activities -Historical Changes in Cash Flows from Continuing Operating Activities - 2005 Compared to 2004 - Alliant Energy�s cash flows fromoperating activities increased $102 million primarily due to changes in the level of accounts receivable sales and lower pension plancontributions, partially offset by higher income tax payments. IPL�s cash flows from operating activities decreased $16 million primarily dueto higher income tax payments, partially offset by changes in the level of accounts receivable sales and the impact of rate increases. WPL�scash flows from operating activities decreased $23 million primarily due to higher income tax payments and higher purchased power and fuelexpenditures, partially offset by changes in the level of accounts receivable sales.

2004 Compared to 2003 - Alliant Energy�s cash flows from operating activities increased $60 million primarily due to changes in workingcapital caused largely by the timing of vendor payments and receivable collections as well as the impact of implementing rate increases at IPLand WPL, partially offset by changes in the level of accounts receivable sales and higher pension plan contributions. IPL�s cash flows fromoperating activities increased $25 million primarily due to changes in working capital caused largely by the timing of tax refunds andpayments and the impact of rate increases, partially offset by changes in the level of accounts receivable sales and higher pension plancontributions. WPL�s cash flows from operating activities increased $61 million primarily due to changes in working capital caused largelyby the timing of tax payments and refunds.

Sale of Accounts Receivable - Refer to Note 4 of Alliant Energy�s �Notes to Consolidated Financial Statements� for information on IPL�ssale of accounts receivable program. IPL�s current receivables sales agreement expires in April 2006 and it is evaluating whether or not it willcontinue to sell receivables beyond the expiration date of this agreement.

Cash Flows used for Continuing Investing Activities -Historical Changes in Cash Flows used for Continuing Investing Activities - 2005 Compared to 2004 - Alliant Energy�s cash flows usedfor investing activities decreased $346 million primarily due to proceeds received from WPL�s sale of its interest in Kewaunee and relatedliquidation of a portion of nuclear decommissioning trust fund assets in 2005 and expenditures associated with the construction of Emery andSFEF in 2004. IPL�s cash flows used for investing activities decreased $62 million primarily due to expenditures associated with the



construction of Emery in 2004. WPL�s cash flows used for investing activities decreased $171 million primarily due to proceeds receivedfrom WPL�s sale of its interest in Kewaunee and related liquidation of a portion of nuclear decommissioning trust fund assets in 2005.

2004 Compared to 2003 - Alliant Energy�s cash flows used for investing activities increased $366 million primarily due to proceeds receivedfrom asset sales (primarily WPC and its Australian business) in 2003, partially offset by the 2003 acquisition by Resources of a 309 MWpower plant in Neenah, Wisconsin and lower expenditures associated with the construction of Emery. IPL�s cash flows used for investingactivities decreased $163 million primarily due to lower expenditures associated with the construction of Emery. WPL�s cash flows used forinvesting activities increased $106 million primarily due to increased levels of construction and acquisition expenditures and the 2003proceeds from the sale of WPL�s water utility serving the Beloit area.

Construction and Acquisition Expenditures - Capital expenditures, investments and financing plans are continually reviewed, approved andupdated as part of Alliant Energy�s ongoing strategic planning and budgeting processes. In addition, material capital expenditures andinvestments are subject to a rigorous cross-functional review prior to approval. Changes in Alliant Energy�s anticipated construction andacquisition expenditures may result from a number of reasons including, but not limited to, economic conditions, regulatory requirements,ability to obtain adequate and timely rate relief, the level of Alliant Energy�s profitability, Alliant Energy�s desire to maintain investment-grade credit ratings and reasonable capitalization ratios, variations in sales, changing market conditions and new opportunities. Alliant Energycurrently anticipates construction and acquisition expenditures during 2006 and 2007 as follows (in millions):

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Alliant Energy IPL WPL2006 2007 2006 2007 2006 2007

Utility business-related:Transmission and distribution (electric and gas) $235 $245 $145 $150 $90 $95Generation - new facilities 30 110 -- -- 30 110Generation - existing facilities 60 70 30 35 30 35Environmental 30 75 15 50 15 25Contributions to ATC 12 11 -- -- 12 11Other miscellaneous utility property 78 79 40 40 38 39

Total utility business-related 445 590 $230 $275 $215 $315

Non-regulated businesses 30 10$475 $600

Alliant Energy has not yet entered into contractual commitments relating to the majority of its anticipated capital expenditures. As a result,Alliant Energy does have discretion with regard to the level of capital expenditures eventually incurred and it closely monitors and updatessuch estimates on an ongoing basis based on numerous economic and other factors. Refer to �Strategic Overview� and �Environmental� forfurther discussion.

Proceeds from Asset Sales - Refer to �Strategic Overview� for discussion of Alliant Energy�s recent asset divesture activities. Proceeds fromasset divestitures have been and will be used primarily for debt reduction and general corporate purposes.

Cash Flows from (used for) Continuing Financing Activities -Historical Changes in Cash Flows from (used for) Continuing Financing Activities - 2005 Compared to 2004 - Alliant Energy�s cashflows used for financing activities increased $468 million primarily due to changes in the amount of debt issued and retired, includingincreased debt premiums, and lower proceeds from common stock issuances. IPL�s cash flows used for financing activities increased $44million primarily due to capital contributions of $100 million from Alliant Energy in 2004, partially offset by changes in the amount of debtissued and retired. WPL�s cash flows used for financing activities increased $122 million primarily due to changes in the amount of debtissued and retired.



2004 Compared to 2003 - Alliant Energy�s cash flows from financing activities increased $170 million primarily due to changes in theamount of debt issued and retired, partially offset by lower proceeds from common and preferred stock issuances. IPL�s cash flows fromfinancing activities decreased $186 million primarily due to a lower capital contribution from Alliant Energy in 2004 as compared to 2003,changes in the amount of debt issued and retired and the issuance of preferred stock in 2003. WPL�s cash flows used for financing activitiesincreased slightly in 2004 primarily due to a capital contribution from Alliant Energy in 2003 and higher common stock dividends, largelyoffset by changes in the amount of debt issued and retired.

FERC and PUHCA Financing Authorizations - Under PUHCA 2005, FERC has authority over the issuance of utility securities, except tothe extent that a state regulatory commission has jurisdiction over such matters. FERC rules permit IPL to continue operating under the mostrecent financing order granted by the Securities and Exchange Commission (SEC) under PUHCA 1935 until a new financing authorizationrequest is filed with FERC. This most recent financing order granted by the SEC under PUHCA 1935 authorized IPL to issue preferred stock,long-term debt securities and short-term debt securities up to a combined amount of $700 million for a period from December 2004 throughDecember 2007. Issuance of debt securities by WPL are authorized by its state regulatory commissions and therefore are exempt fromregulation by FERC. FERC also does not have authority over the issuance of securities by Alliant Energy or Resources.

State Regulatory Agency Financing Authorizations - IPL has authorization for short-term borrowings of $300 million. WPL hasauthorization for short-term borrowings of $250 million, $211 million for general corporate purposes and an additional $39 million to redeemits variable rate demand bonds.

Shelf Registrations - Alliant Energy�s current SEC shelf registration allows Alliant Energy flexibility to offer from time to time up to anaggregate of $300 million of common stock, stock purchase contracts and stock purchase units. IPL�s current SEC shelf registration allowsIPL flexibility to offer from time to time up to an aggregate of $210 million of preferred stock, senior unsecured debt securities and collateraltrust bonds. WPL�s current SEC shelf registration allows WPL flexibility to offer from time to time up to an aggregate of $150 million of itspreferred stock, senior unsecured debt securities and first

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mortgage bonds. Alliant Energy, IPL and WPL had $208 million, $35 million and $50 million remaining available under their respective shelfregistrations as of Dec. 31, 2005.

Common Stock Dividends - In January 2006, Alliant Energy announced an increase in its quarterly common stock dividend from $0.2625per share to $0.2875 per share, which is equivalent to an annual rate of $1.15 per share, beginning with the Feb. 15, 2006 dividend payment.Alliant Energy�s general long-term goal is to maintain a dividend payout ratio that is competitive with the industry average. Currently, AlliantEnergy�s goal is to attain a payout percentage of approximately 60% to 70% of its utility earnings.

Common Stock Issuances - In 2005, Alliant Energy issued approximately $29 million of additional common stock under its ShareownerDirect Plan, 401(k) Savings Plan and equity incentive plans. In the first quarter of 2006, Alliant Energy decided to begin satisfying any newdemand under its Shareowner Direct Plan and 401(k) Savings Plan through open market purchases. Alliant Energy currently anticipates itsonly common stock issuances for the remainder of 2006 will be to issue new shares to satisfy demands under its equity incentive plans.

Short- and Long-term Debt - In 2005, Alliant Energy, IPL and WPL completed the re-syndication of three revolving credit facilities andextended the terms of the facilities to August 2010. Refer to �Creditworthiness� for a discussion of the various restrictive covenants and otherprovisions of these new credit facilities. These credit facilities backstop commercial paper issuances used to finance short-term borrowingrequirements, which fluctuate based on seasonal corporate needs, the timing of long-term financings and capital market conditions. Thefacility at the parent company is used to fund Resources and Corporate Services as well as its own needs. Information regarding borrowingsunder these credit facilities at Dec. 31, 2005 was as follows (dollars in millions):

Alliant Energy Parent Company IPL WPLCommercial paper:

Amount outstanding $263.0 $-- $169.5 $93.5Weighted average maturity 4 days N/A 5 days 3 daysDiscount rates 4.3-4.52% N/A 4.35-4.52% 4.3-4.45%



Available capacity $387.0 $100.0 $130.5 $156.5

In 2005, Alliant Energy continued its debt reduction efforts at its non-regulated businesses by retiring early $379 million of Resources� seniornotes. Alliant Energy plans to further these efforts by retiring an additional $358 million of senior notes at Resources in the first quarter of2006. Refer to Note 8 of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information on these early debtretirements at Resources and other additional information regarding short- and long-term debt.

Creditworthiness -Credit Facilities - Alliant Energy�s, IPL�s and WPL�s credit facility agreements each contain a financial covenant related to debt-to-capitalratios as follows:

Covenant Requirement Status at Dec. 31, 2005Alliant Energy Less than 65% 46%IPL Less than 58% 48%WPL Less than 58% 37%

The debt component of the capital ratios includes long- and short-term debt (excluding non-recourse debt, trade payables and imputed debt forcertain purchased power agreements), capital lease obligations, letters of credit and guarantees of the foregoing and unfunded vested benefitsunder qualified pension plans. The equity component excludes accumulated other comprehensive income (loss).

The credit agreements contain negative pledge provisions, which generally prohibit placing liens on any of the property of Alliant Energy orits subsidiaries with certain exceptions, including among others, for the issuance of secured debt under first mortgage bond indentures by IPLand WPL, non-recourse project financing, purchase money liens and liens on the ownership interests in or assets of foreign subsidiaries tosecure not more than $300 million aggregate principal amount of foreign debt.

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The credit agreements contain provisions that require, during their term, any proceeds from asset sales, with certain exclusions, in excess of20% of Alliant Energy�s, IPL�s and WPL�s respective consolidated assets to be used to reduce commitments under their respective facilities.Exclusions include, among others, certain sale and lease-back transactions, and sales of the respective borrower�s nuclear, transmission ornon-regulated assets.

The credit agreements contain customary events of default. In addition, Alliant Energy�s credit agreement contains a cross default provisionthat is triggered if a domestic majority-owned subsidiary of Alliant Energy defaults on debt totaling $50 million or more. A default by aminority-owned affiliate or a foreign subsidiary would not trigger a cross default event. A default by Alliant Energy or Resources would nottrigger a cross default event for either IPL or WPL, nor would a default by either of IPL or WPL trigger a cross default event for the other. Ifan event of default under any of the credit agreements occurs and is continuing, then the lenders may declare any outstanding obligationsunder the credit agreements immediately due and payable. In addition, if any order for relief is entered under bankruptcy laws with respect toAlliant Energy, IPL or WPL, then any outstanding obligations under the respective credit agreements would be immediately due and payable.

A material adverse change representation is not required for borrowings under these credit agreements.

At Dec. 31, 2005, Alliant Energy, IPL and WPL were in compliance with all covenants and other provisions of the credit facilities.

Credit Ratings and Balance Sheet - Access to the capital and credit markets, and the costs of obtaining external financing, are dependent oncreditworthiness. Alliant Energy is committed to taking the necessary steps required to maintain investment-grade credit ratings and a strongbalance sheet. Although Alliant Energy believes the actions taken since late 2002 to strengthen its balance sheet will enable it to maintaininvestment-grade credit ratings, no assurance can be given that it will be able to maintain its existing credit ratings. If Alliant Energy�s creditratings are downgraded in the future, then Alliant Energy�s borrowing costs may increase and its access to capital markets may become



limited. If access to capital markets becomes significantly constrained, then Alliant Energy�s results of operations and financial conditioncould be materially adversely affected. Alliant Energy�s current credit ratings and outlooks are as follows:

Standard & Poor�s Moody�s InvestorsRatings Services (S&P) Service (Moody�s)

IPL Senior secured long-term debt A- A3Senior unsecured long-term debt BBB+ Baa1Commercial paper A-2 P-2Corporate/issuer BBB+ Baa1

WPL Senior secured long-term debt A- A1Senior unsecured long-term debt A- A2Commercial paper A-2 P-1Corporate/issuer A- A2

Resources (a) Senior unsecured long-term debt BBB Baa2Corporate/issuer BBB+ Not rated

Alliant Energy Senior unsecured long-term debt BBB Not ratedCommercial paper A-2 P-2Corporate/issuer BBB+ Not rated

All Entities Outlook Stable Stable(a) Resources� senior notes and exchangeable senior notes are fully and unconditionally guaranteed by Alliant Energy.

In January 2006, S&P upgraded the ratings of IPL�s senior unsecured long-term debt to BBB+ from BBB and WPL�s senior unsecured long-term debt to A- from BBB+. At the same time, S&P also changed the outlook on all of IPL�s, WPL�s, Resources� and Alliant Energy�s rateddebt to stable from negative.

Ratings Triggers - The long-term debt of Alliant Energy and its subsidiaries is not subject to any repayment requirements as a result ofexplicit credit rating downgrades or so-called �ratings triggers.� However, Alliant Energy and its subsidiaries are parties to variousagreements, including purchased power agreements, fuel contracts, accounts receivable sale contracts and corporate guarantees that aredependent on maintaining investment-grade credit ratings. In the event of a downgrade below investment-grade levels, Alliant Energy or itssubsidiaries may need to provide credit support, such as letters of credit or cash collateral equal to the amount of the exposure, or may need tounwind the contract or pay the underlying obligation. IPL is a party to an accounts receivable sales agreement that provides that a downgradebelow investment-grade level associated with its secured debt makes it ineligible to sell receivables under the program. In the event of adowngrade below investment-grade level, management believes the credit facilities at Alliant Energy, IPL and WPL would provide sufficientliquidity to

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cover counterparty credit support or collateral requirements under the various purchased power, fuel and receivables sales agreements.

Off-Balance Sheet Arrangements - Alliant Energy utilizes off-balance sheet synthetic operating leases that relate to the financing of certaincorporate headquarters, aircraft, utility railcars and a utility radio dispatch system. Synthetic leases provide favorable financing rates to AlliantEnergy while allowing it to maintain operating control of its leased assets. Refer to Note 3(a) of the �Notes to Consolidated FinancialStatements� for future minimum lease payments under, and residual value guarantees by Alliant Energy of, these synthetic leases. AlliantEnergy�s, IPL�s and WPL�s credit facility agreements prohibit them from entering into any additional synthetic leases without the consent ofa majority of the lenders to these credit facilities. Alliant Energy uses special purpose entities for its limited recourse utility sale of accountsreceivable program whereby IPL uses proceeds from the sale of the accounts receivable and unbilled revenues to maintain flexibility in itscapital structures, take advantage of favorable short-term interest rates and finance a portion of its long-term cash needs. The sale of accountsreceivables generates a significant amount of liquidity for IPL. Refer to Note 4 of Alliant Energy�s �Notes to Consolidated FinancialStatements� for aggregate proceeds from the sale of accounts receivable. If sale of accounts receivable financing alternative were notavailable, IPL anticipates it would have enough short-term borrowing capacity to compensate. Refer to �Ratings Triggers� for the impact of



certain credit rating downgrades on IPL related to the accounts receivable sales program. Alliant Energy has reviewed these entities during itsimplementation of revised Financial Accounting Standards Board Interpretation No. 46, �Consolidation of Variable Interest Entities,� (FIN46R), and determined that consolidation of these entities is not required. Refer to Note 20 of Alliant Energy�s �Notes to ConsolidatedFinancial Statements� for additional information regarding FIN 46R.

Guarantees and Indemnifications - Alliant Energy has several guarantees and indemnifications outstanding related to its recent divestitureactivities. Refer to Note 11(d) of Alliant Energy�s �Notes to Consolidated Financial Statements� for additional information.

Credit Risk - Alliant Energy�s subsidiaries have credit exposure from electric and natural gas sales and non-performance of contractualobligations by its counterparties. Alliant Energy maintains credit risk oversight and sets limits and policies, which management believesminimizes its overall credit risk exposure. However, there is no assurance that such policies will protect Alliant Energy against all losses fromnon-performance by counterparties. Refer to �Other Matters - Other Future Considerations - Calpine Bankruptcy� for more information onAlliant Energy�s risks related to Calpine�s recent bankruptcy filing.

Certain Financial Commitments -Contractual Obligations - Alliant Energy�s long-term contractual cash obligations as of Dec. 31, 2005 were as follows (in millions):

2006 2007 2008 2009 2010 Thereafter TotalLong-term debt maturities (Note 8(b)) $152 $263 $292 $147 $114 $1,507 $2,475Interest - long-term debt obligations 145 132 118 104 91 887 1,477Capital leases (Note 3(b)) 41 -- -- -- -- 1 42Operating leases (Note 3(a)) 113 138 83 76 71 160 641Purchase obligations (Note 11(b)):

Purchased power and fuel commitments 759 274 148 137 116 283 1,717Other 17 1 1 -- -- -- 19

$1,227 $808 $642 $464 $392 $2,838 $6,371

IPL�s long-term contractual cash obligations as of Dec. 31, 2005 were as follows (in millions):

2006 2007 2008 2009 2010 Thereafter TotalLong-term debt maturities (Note 8(b)) $60 $80 $52 $136 $3 $624 $955Interest - long-term debt obligations 61 53 50 47 38 438 687Capital leases (Note 3(b)) 40 -- -- -- -- -- 40Operating leases (Note 3(a)) 7 6 6 6 7 19 51Purchase obligations (Note 11(b)):

Purchased power and fuel commitments 183 37 9 10 8 22 269Other 6 -- -- -- -- -- 6

$357 $176 $117 $199 $56 $1,103 $2,008

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WPL�s long-term contractual cash obligations as of Dec. 31, 2005 were as follows (in millions):

2006 2007 2008 2009 2010 Thereafter TotalLong-term debt maturities (Note 8(b)) $-- $105 $60 $-- $100 $139 $404Interest - long-term debt obligations 26 22 19 15 12 156 250Capital leases (Note 3(b)) 15 15 15 15 15 218 293Operating leases (Note 3(a)) 86 86 75 66 62 141 516Purchase obligations (Note 11(b)):

Purchased power and fuel commitments 286 118 103 109 104 261 981



Other 3 1 1 -- -- -- 5$416 $347 $273 $205 $293 $915 $2,449

At Dec. 31, 2005, long-term debt and capital lease obligations as noted in the above tables were included on the respective ConsolidatedBalance Sheets. Included in Alliant Energy�s, IPL�s and WPL�s long-term debt obligations was variable rate debt of $92 million, $42 millionand $39 million, which represented 4%, 4% and 10%, respectively, of total long-term debt outstanding. The long-term debt amounts excludereductions related to unamortized debt discounts. Interest on variable rate debt in the above table was calculated using rates as of Dec. 31,2005. As of Dec. 31, 2005, Alliant Energy had committed to retire $83 million of Resources� senior notes therefore that amount is included in2006 in the above table. The remaining $275 million of senior notes at Resources that Alliant Energy intends to retire early in 2006 is includedin the �thereafter� column in the above table given Alliant Energy had not committed to retire these notes as of Dec. 31, 2005. Purchasedpower and fuel commitments represent normal business contracts used to ensure adequate purchased power, coal and natural gas supplies andto minimize exposure to market price fluctuations. Alliant Energy has entered into various purchased power commitments that have not yetbeen directly assigned to IPL and WPL. Such commitments are included in the Alliant Energy purchase obligations but are not included in theIPL or WPL purchase obligations. Other purchase obligations represent individual commitments incurred during the normal course ofbusiness which exceeded $1.0 million at Dec. 31, 2005. In connection with their construction and acquisition programs, Alliant Energy, IPLand WPL also enter into commitments related to such programs on an ongoing basis which are not reflected in the above tables. Refer to�Cash Flows used for Continuing Investing Activities - Construction and Acquisition Expenditures� for additional information. In addition, atDec. 31, 2005, there were various other long-term liabilities and deferred credits included on the respective Consolidated Balance Sheets that,due to the nature of the liabilities, the timing of payments cannot be estimated and are therefore excluded from the above tables. Refer to Note6(a) of the �Notes to Consolidated Financial Statements� for anticipated pension and other postretirement benefit funding amounts, which arenot included in the above tables.

Environmental -Overview - Alliant Energy�s pollution abatement programs are subject to continuing review and are periodically revised due to changes inenvironmental regulations, construction plans and escalation of construction costs. Alliant Energy continually evaluates the impact of potentialfuture international, federal, state and local environmental rulemakings on its operations. While the final outcome of these rule makingscannot be predicted, Alliant Energy believes that required capital investments and/or modifications resulting from them could be significant,but expects that prudent expenses incurred by IPL and WPL likely would be recovered in rates from its customers. Given the dynamic natureof the utility environmental and other related regulatory requirements, IPL and WPL have an integrated planning process that includes thedetermination of new generation, environmental compliance requirements and other operational needs. As part of IPL�s and WPL�s planningprocess, significant investments for environmental requirements are approved by Alliant Energy�s Board of Directors. The following aremajor environmental issues that could potentially have a significant impact on Alliant Energy�s financial condition and results of operations.Refer to �Cash Flows used for Continuing Investing Activities - Construction and Acquisition Expenditures� for information on IPL�s andWPL�s anticipated 2006 and 2007 environmental capital expenditures.

Air Quality - The 1990 Clean Air Act Amendments mandate preservation of air quality through existing regulations and periodic reviews toensure adequacy of these provisions based on scientific data. In March 2005, the United States of America (U.S.) Environmental ProtectionAgency (EPA) finalized the Clean Air Interstate Rule (CAIR), which requires emission control upgrades to existing electric generating unitswith greater than 25 MW capacity. This rule will cap emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) in 28 states (includingIowa and Wisconsin) in the eastern U.S and, when fully implemented, reduce SO2 and NOx emissions in these states by over 70% and 60%from 2003 levels, respectively. The specific reductions for IPL, WPL and Resources will be determined by state-specific implementationplans, which could be more or less stringent than the noted 70% and 60% reductions. The first phase of compliance for SO2 and NOx isrequired by 2010 and 2009, respectively, and the second phase of compliance for both SO2 and NOx is required by 2015. This federal ruleallows that additional reduction requirements may also be imposed at the state level for those areas that are in non-attainment with NationalAmbient Air Quality Standards (NAAQS). WPL has existing electric

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generating units located in non-attainment areas for the 8-hour ozone standard and may be subject to additional NOx emissions reductions.



In March 2005, the EPA also finalized the Clean Air Mercury Rule (CAMR) which requires mercury emission control upgrades for coal-firedgenerating units with greater than 25 MW capacity. When fully implemented, this rule will reduce U.S. utility (including IPL and WPL)mercury emissions by approximately 70% in a two-phased reduction approach. The first phase of compliance is required by 2010 and thesecond phase by 2018.

The final CAIR and CAMR rules were effective in May 2005 and each state must submit enforceable plans to the EPA for approval, whichcomply with the requirements of these rules, by September and November 2006, respectively. Alliant Energy is actively participating in thedevelopment of the state implementation plans. Although the federal rulemakings were anticipated, specific compliance plans cannot becompleted until state implementation plans are finalized.

In 2004, the EPA�s final Industrial Boiler Maximum Achievable Control Technology (MACT) rule became effective and compliance withthese new emission requirements for hazardous air pollutants is required by 2007. This rule applied to fossil-fueled generating units less than25 MW. In March 2005, Alliant Energy submitted initial notifications to the EPA and Iowa Department of Natural Resources (DNR)identifying specific fossil-fueled generating units less than 25 MW that potentially may require compliance with the Industrial Boiler MACTrule. In October 2005, the EPA published a notice of reconsideration to the Industrial Boiler MACT including proposed changes clarifyingthat this rule excludes electric utility steam generating units (EUSGU) and any unit that does not meet the EUSGU definition but isnevertheless subject to CAMR. At this time, the EPA has not provided a written response to Alliant Energy regarding the applicability of thisrule.

Alliant Energy has completed a preliminary evaluation of CAIR and CAMR rulemakings based on the EPA model rule framework that statesmay adopt using multi-state cap and trade programs to meet the required emissions reductions in a flexible and cost-effective manner. Theestimated capital expenditures for 2006 through 2010 associated with the first phase of compliance for CAIR and CAMR are anticipated to be$170 million to $225 million for IPL and $100 million to $140 million for WPL. Cost estimates for Resources� generating facilities will beassessed upon clarification with regulatory agencies of rule applicability to non-regulated generation units. Alliant Energy expects additionalcapital investments for the second phase compliance with CAIR and CAMR to be significant and material. Based on Alliant Energy�s mostrecent planning scenario, its initial estimates for capital expenditures for 2011 through 2018 required for phase two compliance with theserules are $100 million to $160 million for IPL and $150 million to $200 million for WPL. These estimates are based on today�s costs ofcurrent technologies and information currently available regarding the EPA final rules. The costs may change depending on the requirementsof the final state rules. In addition, there will also be recurring costs for operating and maintaining the emissions control equipment associatedwith these capital expenditures. Pending the states� adoption of EPA rules, it is possible that emissions reduction requirements may beachieved through market-based trading of SO2, NOx and mercury emissions allowances. Emissions allowances markets may be used by IPL,WPL and Resources to achieve compliance, with the potential to increase (or decrease) expenses associated with allowances purchases (orsales). These costs will depend upon actual emissions levels resulting from generation during this period, performance of emissions controlequipment and market prices for emissions allowances.

In addition, Alliant Energy is aware that certain citizen groups have begun pursuing claims against utility generating stations regarding excessemissions, including opacity emissions. Alliant Energy continues to monitor its emissions closely to determine whether additional controlswill be required. The additional capital investments for CAIR and CAMR compliance, as discussed above, will also contribute toimprovements in opacity emissions. However, should more stringent opacity limits be required, the timing of investments and controlequipment options to comply with these multiple regulatory requirements will need further evaluation.

WPL previously responded confidentially to multiple data requests from the EPA related to the historical operation and associated airpermitting for certain major Wisconsin coal-fired generating units. In 2004, WPL was notified by the EPA that a third party had requestedWPL�s response materials. After review of such records, WPL determined that the information would no longer be claimed as confidential. InOctober 2005, the EPA issued a memorandum with revised federal policy guidance on New Source Review enforcement pertaining to pre-construction air permitting requirements. As a result, WPL anticipates no further action from the EPA resulting from these prior requests.

There have been instances where citizen groups have pursued claims against utilities for alleged air permitting violations. While IPL and WPLhave not received any such claims to date, WPL is aware that certain public comments have been submitted to the Wisconsin DNR regardingthe renewal of an air operating permit for one of WPL�s generating stations. WPL is unable to predict what actions, if any, the WisconsinDNR or the public commenters may take in response to these public comments.



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Alliant Energy is also currently monitoring various other potential international, federal, state and local environmental rulemakings andactivities, including, but not limited to: litigation of various federal rules issued under the statutory authority of the Clean Air ActAmendments; revisions to the New Source Review, and Prevention of Significant Deterioration permitting programs; Regional Hazeevaluations for Best Available Retrofit Technology; revisions to the NAAQS including particulate matter, and several other legislative andregulatory proposals regarding the control of emissions of air pollutants and greenhouse gases from a variety of sources, including generatingfacilities.

Water Quality - The EPA regulation under the Clean Water Act referred to as �316(b)� became effective in 2004. This regulation requiresexisting large power plants with cooling water intake structures to apply technology to minimize adverse environmental impacts to fish andother aquatic life. IPL and WPL are currently studying such impacts and will have compliance plans in place by the required date of January2008. IPL and WPL are investigating compliance options and are unable to predict the final outcome, but believe that required capitalinvestments and/or modifications resulting from this regulation could be significant.

WPL is also currently evaluating proposed revisions to the Wisconsin Administrative Code concerning the amount of heat that WPL�sgenerating stations can discharge into Wisconsin waters. At this time, WPL is unable to predict the final outcome, but believes that requiredcapital investments and/or modifications resulting from this regulation could be significant.

In 2004, FERC issued an order regarding one of WPL�s hydroelectric project licenses to require WPL to develop a detailed engineering andbiological evaluation of potential fish passages and to install an agency-approved fish-protective device within one year, and within threeyears to install an agency-approved fish passage. WPL is working with the appropriate federal and state agencies to comply with theseprovisions and research solutions. In September 2005, WPL filed a one-year extension request with FERC for the detailed engineering andbiological evaluation of potential fish passages and installation of an agency-approved fish-protective device. The due date for the submittal ofthis evaluation has been extended to October 2006. WPL believes that required capital investments and/or modifications resulting from thisissue could be significant.

Land and Solid Waste - In June 2005, IPL was served with a lawsuit filed by the EPA against 10 named defendants to recover costs incurredfor investigation and remediation of the Missouri Electric Works, Inc. (MEW) site in Cape Girardeau, Missouri. IPL had previously beenserved a complaint in December 2000, filed by the MEW Site Trust Fund, the potentially responsible party group involved. The EPA hasalleged $5.5 million of costs incurred to date. IPL believes that it is not liable for costs associated with the site because it did not arrange forthe disposal of any waste materials at the site, and intends to defend this lawsuit which is scheduled for trial in 2007. Although IPL believes ithas strong defenses, IPL is currently unable to predict the outcome of this lawsuit.

In 2004, IPL received notification from the Iowa DNR regarding groundwater monitoring of four of its closed ash landfills and the need toevaluate potential offsite groundwater impacts at two of its closed landfills. The Iowa DNR approved IPL�s plans to evaluate potential offsitegroundwater impacts at these two landfills, which were implemented beginning April 2005. Work was completed at one of the landfills inJune 2005, with work still pending at the other landfill due to delays with obtaining access agreements from neighboring property owners. TheIowa DNR is aware of the access agreement delays and may intercede with the property owners if necessary. Monitoring results will be usedto determine if further measures are required and IPL is unable to predict the outcome at this time.

Alliant Energy is also monitoring various other land and solid waste regulatory changes. This includes a potential EPA regulation formanagement of coal combustion product in landfills and surface impoundments that could require installation of monitoring wells at somefacilities and an ongoing expanded groundwater monitoring program. Compliance with the polychlorinated biphenyls (PCB) Fix-it Rule/Persistent Organic Pollutants Treaty could possibly require replacement of all electrical equipment containing PCB insulating fluid which is asubstance known to be harmful to human health. The Wisconsin Department of Commerce is proposing new rules related to flammable,combustible and hazardous liquids stored in above-ground storage tanks in which the primary financial impact would be from a secondarycontainment requirement for all hazardous materials tanks and for hazardous material unloading areas. Alliant Energy is unable to predict the



outcome of these possible regulatory changes at this time, but believes that the required capital investment and/or modifications resulting fromthese potential regulations could be significant.

Refer to Note 11(e) of Alliant Energy�s �Notes to Consolidated Financial Statements,� �Business� and �Construction and AcquisitionExpenditures� for further discussion of environmental matters.

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OTHER MATTERS

Market Risk Sensitive Instruments and Positions - Alliant Energy�s primary market risk exposures are associated with commodity prices,interest rates, equity prices and currency exchange rates. Alliant Energy has risk management policies to monitor and assist in controllingthese market risks and uses derivative instruments to manage some of the exposures. Refer to Notes 1(l) and 10 of Alliant Energy�s �Notes toConsolidated Financial Statements� for further discussion of Alliant Energy�s derivative financial instruments.

Commodity Price Risk - Alliant Energy is exposed to the impact of market fluctuations in the commodity price and transportation costs ofelectric and natural gas products it procures and markets. Alliant Energy employs established policies and procedures to mitigate its risksassociated with these market fluctuations including the use of various commodity derivatives and contracts of various duration for the forwardsale and purchase of electricity and natural gas. Alliant Energy�s exposure to commodity price risks in its utility business is also significantlymitigated by the current rate making structures in place for recovery of its electric fuel and purchased energy costs (fuel-related costs) as wellas its cost of natural gas purchased for resale.

Current and forecasted prices of electric and natural gas commodities increased significantly in 2005 due, in part, to the natural gas supplydisruption caused by the hurricane activity in the Gulf of Mexico in the third quarter of 2005. The significant increases in the cost of electricand natural gas commodities are not expected to have a significant impact on IPL�s electric and gas margins or WPL�s gas margins due to thetimely recovery of increased costs under their current rate making structures. However, increased prices of electric power and/or natural gasmay result in reduced usage by Alliant Energy�s customers, including the potential for larger customers to switch to alternative fuel sources,and/or higher bad debt expense.

WPL�s electric margins are more exposed to the impact of these increased commodity prices due largely to the retail rate recoverymechanisms in place in Wisconsin for fuel-related costs. WPL�s retail electric rates are based on forecasts of forward-looking test yearperiods and include estimates of future fuel and purchased energy costs anticipated during the test year. During each electric retail rateproceeding, the PSCW sets fuel monitoring ranges based on the forecasted fuel costs used to determine rates. If WPL�s actual fuel costs falloutside these fuel monitoring ranges during the test year period, WPL can request and the PSCW can authorize an adjustment to future retailelectric rates. Refer to �Rates and Regulatory Matters - Other Recent Regulatory Developments - Utility Fuel Cost Recovery� for discussionof recent changes to the fuel monitoring ranges. The PSCW may authorize an interim rate increase, however if the final rate increase is lessthan the interim rate increase, WPL would refund the excess collection to customers at the current authorized return on equity rate. Recoveryof capacity-related charges associated with WPL�s purchased power costs and network transmission charges are recovered from electriccustomers through changes in base rates.

WPL experienced extraordinary increases in its fuel-related costs in 2005 which met the requirements to file for additional fuel-related raterelief. However, WPL estimates it under-collected fuel-related costs in 2005 by approximately $40 million from its retail electric customersgiven the regulatory process and resulting lag in obtaining approved rate relief. Given the prospective nature of the rate changes, amountsunder-collected in this process are costs for which WPL will not be afforded the opportunity for recovery from rate payers in the future. Inaddition, the fuel-related rates that are established are based on test year average costs, thus once rates are set there is a natural under/overrecovery during certain months based on the differences in the estimated average test year costs and the actual monthly costs. Alliant Energyand WPL are unable to determine the anticipated impact of these increases in fuel-related costs on their future results of operations given theuncertainty of how future costs will correlate with the rates in place, the timing and uncertainty of the necessary PSCW approvals toimplement requested fuel-related rate increases and uncertainties regarding future sales volumes. Refer to �Rates and Regulatory Matters� foradditional details of the recent fuel-related retail cases filed by WPL.



WPL�s retail gas tariffs provide for subsequent adjustments to its natural gas rates for changes in the current monthly natural gas commodityprice index. Also, WPL has a gas performance incentive which includes a sharing mechanism whereby 50% of all gains and losses relative tocurrent commodity prices, as well as other benchmarks, are retained by WPL, with the remainder refunded to or recovered from customers.Such rate mechanisms combined with commodity derivatives discussed above significantly reduce commodity risk associated with WPL�scost of natural gas. IPL�s retail tariffs provide for subsequent adjustments to its electric and natural gas rates for changes in the cost of fuel,purchased energy and natural gas purchased for resale thereby eliminating any price risk for prudently incurred commodity costs. Recovery ofcapacity-related charges associated with IPL�s purchased power costs are recovered from electric customers through changes in base rates.

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Interest Rate Risk - Alliant Energy is exposed to risk resulting from changes in interest rates as a result of its issuance of variable-rate debt,IPL�s customer accounts receivable sale program and variable-rate leasing agreements. Alliant Energy manages its interest rate risk bylimiting its variable interest rate exposure and by continuously monitoring the effects of market changes on interest rates. Alliant Energy alsoperiodically uses interest rate swap and forward agreements to assist in the management of its interest exposure. In the event of significantinterest rate fluctuations, management would take actions to minimize the effect of such changes on Alliant Energy�s results of operations andfinancial condition. Assuming no change in Alliant Energy�s, IPL�s and WPL�s consolidated financial structure, if variable interest rateswere to average 100 basis points higher (lower) in 2006 than in 2005, expense would increase (decrease) by approximately $5.8 million, $3.6million and $1.4 million, respectively. These amounts were determined by considering the impact of a hypothetical 100 basis point increase(decrease) in interest rates on Alliant Energy�s, IPL�s and WPL�s consolidated variable-rate debt held, the amount outstanding under IPL�scustomer accounts receivable sale program and variable-rate lease balances at Dec. 31, 2005.

Equity Price Risk - Alliant Energy is exposed to equity price risk as a result of its investments in debt and equity securities, includingsecurities held by its pension and other postretirement benefit plans. Refer to �Critical Accounting Policies - Accounting for Pensions andOther Postretirement Benefits� for the impact on Alliant Energy�s pension and other postretirement benefit costs of changes in the rate ofreturns earned by its plan assets, which include equity securities. Alliant Energy also has investments in publicly-traded securities that aresubject to equity price risk. The most significant of these investments are its New Zealand investments, TrustPower and Infratil Ltd. Refer toNote 9 of Alliant Energy�s �Notes to Consolidated Financial Statements� for further discussion of its investments subject to equity price risk.

Currency Exchange Rate Risk - Alliant Energy has a net investment in New Zealand that is not hedged. As a result, the net investment issubject to currency exchange risk with fluctuations in currency exchange rates. At Dec. 31, 2005, Alliant Energy had a cumulative foreigncurrency translation gain, net of tax benefits, of $7 million related to increases in the value of the New Zealand dollar in relation to the U.S.dollar. This gain is recorded in �Accumulated other comprehensive loss� on Alliant Energy�s Consolidated Balance Sheet. Based on AlliantEnergy�s net investment in New Zealand at Dec. 31, 2005, a 10% sustained increase/decrease over the next 12 months in the New Zealandforeign exchange rate would result in a corresponding pre-tax increase/decrease in cumulative foreign currency translation of $5 million.Alliant Energy�s equity income (loss) from its investment in TrustPower is also impacted by fluctuations in currency exchange rates, howeversuch impact is not significant based on the current level of equity earnings.

At Dec. 31, 2005, Alliant Energy had currency exchange risk associated with approximately $100 million of intercompany receivables at itswholly-owned New Zealand subsidiary associated with the repatriation of proceeds from its issuance of redeemable preference shares(classified as long-term debt) in the third quarter of 2005. During 2005, Alliant Energy recorded pre-tax income of $2.9 million related toforeign currency transaction gains on such receivables. Based on the receivables balance and currency rates at Dec. 31, 2005, a 10% change inthe currency rates would result in a $10 million pre-tax increase/decrease in net income.

New Accounting Pronouncements - Refer to Note 1(m) of Alliant Energy�s �Notes to Consolidated Financial Statements� for discussion ofSFAS 123(R), �Share-Based Payment,� and historical pro forma impacts of stock options on net income.

Critical Accounting Policies - Based on historical experience and various other factors, Alliant Energy believes the following policies arecritical to its business and the understanding of its results of operations as they require critical estimates be made based on the assumptionsand judgment of management. The preparation of consolidated financial statements requires management to make various estimates and



assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingencies. The results of these estimates and judgmentsform the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates and judgments. Alliant Energy�s management has discussed these critical accounting policies with theAudit Committee of its Board of Directors. Refer to Note 1 of Alliant Energy�s �Notes to Consolidated Financial Statements� for a discussionof Alliant Energy�s accounting policies and the estimates and assumptions used in the preparation of the consolidated financial statements.

Regulatory Assets and Liabilities - Alliant Energy�s utility business is regulated by various federal and state regulatory agencies. As aresult, it qualifies for the application of SFAS 71, �Accounting for the Effects of Certain Types of Regulation� (SFAS 71). SFAS 71recognizes that the actions of a regulator can provide reasonable assurance of the existence of an asset or liability. Regulatory assets orliabilities arise as a result of a difference between accounting principles generally accepted in the U.S. and the accounting principles imposedby the regulatory agencies. Regulatory assets generally represent incurred costs that have been deferred as they are probable of recovery incustomer rates. Regulatory liabilities generally represent obligations to make refunds to customers and amounts collected in rates for whichthe related costs have not yet been incurred.

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Alliant Energy�s utility subsidiaries recognize regulatory assets and liabilities in accordance with the rulings of their federal and stateregulators and future regulatory rulings may impact the carrying value and accounting treatment of Alliant Energy�s regulatory assets andliabilities. Alliant Energy periodically assesses whether the regulatory assets are probable of future recovery by considering factors such asregulatory environment changes, recent rate orders issued by the applicable regulatory agencies and the status of any pending or potentialderegulation legislation. The assumptions and judgments used by regulatory authorities continue to have an impact on the recovery of costs,the rate of return on invested capital and the timing and amount of assets to be recovered by rates. A change in these assumptions may result ina material impact on Alliant Energy�s results of operations. Refer to Note 1(c) of Alliant Energy�s �Notes to Consolidated FinancialStatements� for further discussion.

Asset Valuations -Long-Lived Assets to be Held and Used - Alliant Energy�s Consolidated Balance Sheets include significant long-lived assets, which are notsubject to recovery under SFAS 71. As a result, Alliant Energy must generate future cash flows from such assets in a non-regulatedenvironment to ensure the carrying value is not impaired. Alliant Energy assesses the carrying amount and potential impairment of these assetswhenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors Alliant Energy considers indetermining if an impairment review is necessary include a significant underperformance of the assets relative to historical or projected futureoperating results, a significant change in Alliant Energy�s use of the acquired assets or business strategy related to such assets, and significantnegative industry or economic trends. When Alliant Energy determines an impairment review is necessary, a comparison is made between theexpected undiscounted future cash flows and the carrying amount of the asset. If the carrying amount of the asset is the larger of the twobalances, an impairment loss is recognized equal to the amount the carrying amount of the asset exceeds the fair value of the asset. The fairvalue is determined by the use of quoted market prices, appraisals, or the use of valuation techniques such as expected discounted future cashflows. Alliant Energy must make assumptions regarding these estimated future cash flows and other factors to determine the fair value of therespective assets.

At Dec. 31, 2005, Resources owned a steam turbine with a carrying value of $20 million. Alliant Energy is currently reviewing its alternativesto recover the carrying value of the steam turbine including deploying it in a future generation project or selling such equipment. As a result,Alliant Energy has assessed the recoverability of the $20 million cost of the steam turbine by estimating the future anticipated undiscountedcash flows and the probability of each alternative. The future anticipated cash flows and probabilities of these alternatives are significantestimates. A change in these estimates could result in a material asset valuation charge in the future.

Long-Lived Assets Held for Sale - Alliant Energy�s assets held for sale are reviewed for possible impairment each reporting period andimpairment charges are recorded if the carrying value of such assets exceeds the estimated fair value less cost to sell. The fair values of AlliantEnergy�s assets held for sale are generally determined based upon current market information including information from recently negotiateddeals and bid information received from potential buyers when available. If current market information is not available, Alliant Energy



estimates the fair value of its assets held for sale utilizing appraisals or valuation techniques such as expected discounted future cash flows.Alliant Energy must make assumptions regarding these estimated future cash flows and other factors to determine the fair value of therespective assets.

In 2005, Alliant Energy announced its intention to divest its investments in Mexico, China and gas gathering pipeline systems as a result of itsevaluation of strategic alternatives for these investments. As a result, Alliant Energy has reclassified the accounting for these investments asassets held for sale and discontinued operations. While Alliant Energy expects to complete these divestitures in 2006, Alliant Energy is unableto provide assurance that these divestitures will occur in a timely fashion for anticipated proceeds, or that Alliant Energy will not incurmaterial valuation adjustments relating to these investments prior to, or as a result of, these anticipated divestitures. If Alliant Energy is unableto complete these divestitures in a timely fashion, it may be required to reclassify the accounting for these investments from assets andliabilities held for sale and discontinued operations back to continuing operations. Refer to Note 16 of the �Notes to Consolidated FinancialStatements� for further information regarding these assets held for sale.

Unbilled Revenues - Unbilled revenues are primarily associated with Alliant Energy�s utility operations. Energy sales to individualcustomers are based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month,amounts of energy delivered to customers since the date of the last meter reading are estimated and the corresponding estimated unbilledrevenue is recorded. The unbilled revenue estimate is based on daily system demand volumes, estimated customer usage by class, weatherimpacts, line losses and the most recent customer rates. Such process involves the use of various estimates, thus significant changes in theestimates could have a material impact on Alliant Energy�s results of operations.

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Accounting for Pensions and Other Postretirement Benefits - Alliant Energy accounts for pensions and other postretirement benefits underSFAS 87, �Employers� Accounting for Pensions,� and SFAS 106, �Employers� Accounting for Postretirement Benefits Other ThanPensions,� respectively. Under these rules, certain assumptions are made which represent significant estimates. There are many factorsinvolved in determining an entity�s pension and other postretirement liabilities and costs each period including assumptions regardingemployee demographics (including age, life expectancies, and compensation levels), discount rates, assumed rate of returns and funding.Changes made to the plan provisions may also impact current and future pension and other postretirement costs. Alliant Energy�s assumptionsare supported by historical data and reasonable projections and are reviewed annually with an outside actuary firm and an investmentconsulting firm. As of Sep. 30, 2005 (Alliant Energy�s measurement date), Alliant Energy�s future assumptions included a 5.5% discount rateto calculate benefit obligations and a 8.5% annual rate of return on investments. In selecting an assumed discount rate, Alliant Energy reviewsvarious corporate Aa bond indices. The 8.5% annual rate of return is consistent with Alliant Energy�s historical returns and is based onprojected long-term equity and bond returns, maturities and asset allocations. A 100 basis point change in the discount rate would result inapproximate changes of $128 million and $24 million in Alliant Energy�s pension and other postretirement benefit obligations and $11million and $2.7 million in expense in 2006, respectively. A 100 basis point change in the rate of return would result in an approximate changeof $6.5 million and $1.0 million in pension and other postretirement benefit expense in 2006, respectively. Refer to Note 6(a) of the �Notes toConsolidated Financial Statements� for discussion of the impact of a change in the medical trend rates.

Income Taxes - Alliant Energy accounts for income taxes under SFAS 109, �Accounting for Income Taxes.� Under these rules, certainassumptions are made which represent significant estimates. There are many factors involved in determining an entity�s income tax assets,liabilities, benefits and expense each period. These factors include assumptions regarding Alliant Energy�s future taxable income and itsability to utilize tax credits and loss carryovers as well as the impacts from the completion of audits of the tax treatment of certain transactions.Alliant Energy�s assumptions are supported by historical data and reasonable projections and are reviewed quarterly by management.Significant changes in these assumptions could have a material impact on Alliant Energy�s financial condition and results of operations. Referto Note 5 of Alliant Energy�s �Notes to Consolidated Financial Statements� for further discussion.

Capital Loss Utilization - As of Dec. 31, 2005, Alliant Energy estimated that it will be able to generate sufficient capital gains in the future tooffset all of its current federal capital loss carryforwards and projected federal capital losses prior to their expiration. If Alliant Energy isunable to generate at least $300 million of currently anticipated capital gains prior to the expiration of its current capital loss carryforwardsand projected capital losses, there could be a material adverse impact to its financial condition and results of operations. In addition, a change



in management�s estimates and assumptions relating to the amounts and timing of capital gains and losses could have a material impact onAlliant Energy�s financial condition and results of operations during the period in which such change occurs.

Accounting for Costs Related to the MISO Wholesale Energy Market - Effective April 1, 2005, MISO implemented the MISO MidwestMarket, a bid-based energy market. The market requires that all market participants submit day-ahead and/or real-time bids and offers forenergy at locations across the MISO region. MISO then calculates the most efficient solution for all the bids and offers made in the marketthat day, and determines a locational marginal price which reflects the market price for energy. As participants in the new MISO MidwestMarket, IPL and WPL are required to follow MISO�s instructions when dispatching generating units to support MISO�s responsibility formaintaining stability of the transmission system.

As participants in MISO, IPL and WPL offer their generation and bid their demand into the market on an hourly basis, resulting in net receiptfrom or net obligation to MISO for each hour of each day. MISO aggregates these hourly transactions and currently provides updatedsettlement statements to market participants seven, 14, 55, 105, and 155 days after each operating day. MISO also indicated that it will beginperforming a 365-day settlement run on April 1, 2006. The 365-day settlement statements are expected to continue until all operating daytransactions from April 1, 2005 through Aug. 31, 2005 have been resettled. These updated settlement statements may reflect billingadjustments, resulting in an increase or decrease to the net receipt from or net obligation to MISO, which may or may not be recoveredthrough the rate recovery process. These updated settlement statements and charges may be disputed by market participants, including IPL andWPL, in the MISO market. MISO and its participants also have the ability to file with the FERC for settlement periods which may extendbeyond 365 days.

At the end of each month, the amount due from or payable to MISO for the last seven days of the month is estimated, thus significant changesin the estimates and new information provided by MISO in subsequent settlement statements could have a material impact on AlliantEnergy�s, IPL�s and WPL�s respective results of operations.

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Other Future Considerations - In addition to items discussed earlier in MDA and in �Risk Factors� in Item 1A, the following items couldimpact Alliant Energy�s future financial condition or results of operations:

Exchangeable Senior Notes - The interest deductions Alliant Energy has taken on its federal tax returns related to Resources� exchangeablenotes are currently under audit by the IRS. The IRS audit team, in conjunction with Alliant Energy, requested a Technical AdviceMemorandum (TAM) from the Chief Counsel�s Office of the IRS concerning this issue. Alliant Energy received the TAM in July 2005,which states that the Chief Counsel�s Office is in agreement with the IRS audit team�s conclusions that the interest expense on the seniornotes should be capitalized. The capitalization of interest could have a material impact on Alliant Energy�s financial condition and results ofoperations if Alliant Energy is not able to generate sufficient capital gains prior to 2010 to offset the additional capital losses that may resultbecause of the capitalized interest. Refer to �Critical Accounting Policies - Income Taxes - Capital Loss Utilization� for further informationon capital loss utilization. A settlement was negotiated with the IRS in the fourth quarter of 2005 to mitigate a sufficient portion of thepotential adverse impact related to capital losses for the years after 2001. Alliant Energy has an oral agreement with the IRS and expects tofinalize the formal closing agreement with the IRS in 2006. Alliant Energy continues to pursue its options for the interest deductions in 2000and 2001, however it anticipates no significant impact on its future financial condition or results of operations as a result of these deductions.Alliant Energy reflected the terms of its settlement in its 2005 results and the settlement had no material impact on its financial condition orresults of operations.

Coal Delivery Disruptions - In May 2005, Burlington Northern Santa Fe (BNSF) and Union Pacific railroad train derailments in Wyomingcaused damage to heavily-used joint railroad lines that supply coal to numerous generating facilities in the U.S., including facilities owned byIPL and WPL. These railroads invoked their force majeure rights to stop performing under coal delivery contracts serving IPL and WPLfollowing the derailments. BNSF and Union Pacific discontinued their force majeure effective June 3, 2005 and Nov. 23, 2005, respectively.Repair of the damaged lines has been suspended during the winter months and is expected to resume again in spring 2006 with anticipatedcongestion and delays of coal delivery throughout 2006. The damaged railroad lines limited coal deliveries from the Powder River Basin tocertain generating facilities owned by IPL and WPL. Winter weather and other operational issues have prevented the railroads from increasing



delivery rates on a consistent basis beyond the levels experienced during the force majuere. As a result of the ongoing conservation efforts,coal inventories were approaching normal levels at Dec. 31, 2005, allowing operations at most plants to resume to normal dispatch levels. IPLand WPL continue to closely monitor the delivery rates and will continue to take proactive fuel management actions to conserve coal whennecessary to preserve reliability of their plants by reducing coal-fired generation during weekday off-peak hours and weekends and whenreplacement costs are more economical. These actions result in increased energy production and purchase costs for the system. Refer to Note1(c) of Alliant Energy�s �Notes to Consolidated Financial Statements� and �Rates and Regulatory Matters� for additional informationregarding regulatory recovery of costs associated with these coal delivery disruptions.

Depreciation Study - In 2005, IPL completed a depreciation study related to its utility plant in service. Based on the results of this study, IPLexpects its 2006 annual depreciation expense to decrease approximately $18 million compared to 2005 annual depreciation expense amountsbefore giving consideration to depreciation of ongoing property additions. This depreciation study will be considered in IPL�s next rateproceeding in Iowa and is currently being addressed in its on-going rate proceeding in Minnesota. Due to uncertainties such as to when and towhat extent the new depreciation estimates from the study will be reflected in its rates, IPL is unable to determine whether the impacts of anyanticipated decrease in future annual depreciation expense resulting from this study will result in a material impact on its financial condition orresults of operations. WPL will begin conducting an updated depreciation study related to its utility plant in service in 2006.

Calpine Bankruptcy - In December 2005, Calpine filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code.Alliant Energy, through its subsidiary, WPL, has purchased power agreements with Calpine subsidiaries related to the RockGen and Riversidegenerating facilities. The RockGen facility is part of the bankruptcy proceedings but the Riverside facility is excluded. WPL utilizes theRockGen facility primarily for capacity. Alliant Energy is currently evaluating its options should the purchased power agreement beterminated by the bankruptcy trustees. While Alliant Energy is unable to provide any assurances at this time, it does not expect the Calpinebankruptcy to have a material adverse impact on its future financial condition or results of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk are reported under �Other Matters - Market Risk Sensitive Instruments andPositions� in MDA.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Alliant Energy Page NumberManagement�s Annual Report on Internal Control Over Financial Reporting 55Reports of Independent Registered Public Accounting Firm 56-57Consolidated Statements of Income for the Years Ended Dec. 31, 2005, 2004 and 2003 58Consolidated Balance Sheets as of Dec. 31, 2005 and 2004 59-60Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2005, 2004 and 2003 61Consolidated Statements of Capitalization as of Dec. 31, 2005 and 2004 62Consolidated Statements of Changes in Common Equity for the Years Ended

Dec. 31, 2005, 2004 and 2003 63Notes to Consolidated Financial Statements 64-103

IPLReport of Independent Registered Public Accounting Firm 104Consolidated Statements of Income for the Years Ended Dec. 31, 2005, 2004 and 2003 105



Consolidated Balance Sheets as of Dec. 31, 2005 and 2004 106-107Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2005, 2004 and 2003 108Consolidated Statements of Capitalization as of Dec. 31, 2005 and 2004 109Consolidated Statements of Changes in Common Equity for the Years Ended


WPLReport of Independent Registered Public Accounting Firm 119Consolidated Statements of Income for the Years Ended Dec. 31, 2005, 2004 and 2003 120Consolidated Balance Sheets as of Dec. 31, 2005 and 2004 121-122Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2005, 2004 and 2003 123Consolidated Statements of Capitalization as of Dec. 31, 2005 and 2004 124Consolidated Statements of Changes in Common Equity for the Years Ended


Refer to Note 15 of Alliant Energy�s, IPL�s and WPL�s �Notes to Consolidated Financial Statements� for the quarterly financial datarequired by Item 8.

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MANAGEMENT��S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Alliant Energy Corporation and subsidiaries is responsible for establishing and maintaining adequate internal control overfinancial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Alliant Energy�sinternal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of the inherent limitations of internal control over financial reporting, misstatements may not be prevented or detected on a timelybasis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to therisk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

Alliant Energy�s management assessed the effectiveness of its internal control over financial reporting as of December 31, 2005 using thecriteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on this assessment, Alliant Energy�s management believes that, as of December 31, 2005, its internal control overfinancial reporting was effective based on those criteria.

Deloitte & Touche LLP, Alliant Energy�s independent registered public accounting firm, has issued an attestation report on management�sassessment of its internal control over financial reporting. That attestation report is set forth immediately prior to the report of Deloitte &Touche LLP on the financial statements included herein.

/s/ William D. HarveyWilliam D. HarveyChairman, President and Chief Executive Officer



/s/ Eliot G. ProtschEliot G. ProtschSenior Executive Vice President and Chief Financial Officer

/s/ John E. KratchmerJohn E. KratchmerVice President-Controller and Chief Accounting Officer

March 1, 2006

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareowners of Alliant Energy Corporation:

We have audited management�s assessment, included in the accompanying Management�s Annual Report on Internal Control Over FinancialReporting, that Alliant Energy Corporation and subsidiaries (the �Company�) maintained effective internal control over financial reporting asof December 31, 2005, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. The Company�s management is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express anopinion on management�s assessment and an opinion on the effectiveness of the Company�s internal control over financial reporting based onour audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,evaluating management�s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing suchother procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company�s internal control over financial reporting is a process designed by, or under the supervision of, the company�s principalexecutive and principal financial officers, or persons performing similar functions, and effected by the company�s board of directors,management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recordedas necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company�s assetsthat could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper managementoverride of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of anyevaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management�s assessment that the Company maintained effective internal control over financial reporting as of December 31,2005, is fairly stated, in all material respects, based on the criteria established in Internal Control-Integrated Framework issued by the



Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31, 2005, based on the criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidatedfinancial statements and financial statement schedule as of and for the year ended December 31, 2005 of the Company and our report datedMarch 1, 2006 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLPDELOITTE & TOUCHE LLP

Milwaukee, WisconsinMarch 1, 2006

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To the Board of Directors and Shareowners of Alliant Energy Corporation:

We have audited the accompanying consolidated balance sheets and statements of capitalization of Alliant Energy Corporation andsubsidiaries (the �Company�) as of December 31, 2005 and 2004, and the related consolidated statements of income, cash flows, and changesin common equity for each of the three years in the period ended December 31, 2005. Our audits also included the financial statementschedule listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of theCompany�s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on ouraudits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31,2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financialstatement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all materialrespects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectivenessof the Company�s internal control over financial reporting as of December 31, 2005, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1,2006 expressed an unqualified opinion on management�s assessment of the effectiveness of the Company�s internal control over financialreporting and an unqualified opinion on the effectiveness of the Company�s internal control over financial reporting.





57

ALLIANT ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31,2005 2004 2003

(dollars in millions, except per share amounts)Operating revenues:Utility:Electric $2,320.6 $2,009.0 $1,917.1Gas 685.1 569.8 566.9Other 85.6 90.6 104.2

Non-regulated 188.3 135.4 137.8

3,279.6 2,804.8 2,726.0

Operating expenses:Utility:Electric production fuel and purchased power 1,009.3 747.4 730.6Cost of gas sold 504.6 396.9 396.1Other operation and maintenance 698.5 707.2 701.8

Non-regulated operation and maintenance 170.0 127.9 128.6Depreciation and amortization 320.3 316.9 286.8Taxes other than income taxes 101.0 100.2 88.9

2,803.7 2,396.5 2,332.8

Operating income 475.9 408.3 393.2

Interest expense and other:Interest expense 175.8 176.9 205.1Loss on early extinguishment of debt 54.4 8.9 16.9Equity income from unconsolidated investments (59.6) (34.3) (17.6)Asset valuation charges - Brazil investments 334.3 - -Allowance for funds used during construction (10.0) (18.5) (20.7)Preferred dividend requirements of subsidiaries 18.7 18.7 16.9Interest income and other (41.2) (53.0) (34.7)

472.4 98.7 165.9

Income from continuing operations before income taxes 3.5 309.6 227.3

Income tax expense (benefit) (52.9) 91.2 75.6



Income from continuing operations 56.4 218.4 151.7

Income (loss) from discontinued operations, net of tax (64.1) (72.9) 37.8

Income (loss) before cumulative effect of changes in accounting principles (7.7) 145.5 189.5

Cumulative effect of changes in accounting principles, net of tax - - (6.0)

Net income (loss) ($7.7) $145.5 $183.5

Average number of common shares outstanding (basic) (000s) 116,476 113,274 101,366

Earnings per average common share (basic):Income from continuing operations $0.48 $1.93 $1.50Income (loss) from discontinued operations (0.55) (0.65) 0.37Cumulative effect of changes in accounting principles - - (0.06)

Net income (loss) ($0.07) $1.28 $1.81

Average number of common shares outstanding (diluted) (000s) 116,793 113,701 101,544

Earnings per average common share (diluted):Income from continuing operations $0.48 $1.92 $1.50Income (loss) from discontinued operations (0.55) (0.64) 0.37Cumulative effect of changes in accounting principles - - (0.06)

Net income (loss) ($0.07) $1.28 $1.81

Dividends declared per common share $1.05 $1.0125 $1.00

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

58

ALLIANT ENERGY CORPORATIONCONSOLIDATED BALANCE SHEETS

December 31,ASSETS 2005 2004

(in millions)Property, plant and equipment:Utility:Electric plant in service $5,887.3 $5,554.8Gas plant in service 679.9 649.2Other plant in service 508.5 526.5Accumulated depreciation (2,741.7) (2,619.1)

Net plant 4,334.0 4,111.4



Construction work in progress 134.3 156.2Other, less accumulated depreciation (accum. depr.) of $4.1 and $3.4 3.2 4.5

Total utility 4,471.5 4,272.1

Non-regulated and other:Non-regulated Generation, less accum. depr. of $25.0 and $17.8 280.6 266.2Other non-regulated investments, less accum. depr. of $38.9 and $37.7 60.6 61.9Alliant Energy Corporate Services, Inc. and other, less accum. depr. of $65.6 and $44.1 53.5 65.1

Total non-regulated and other 394.7 393.2

4,866.2 4,665.3

Current assets:Cash and temporary cash investments 205.3 202.4Restricted cash 19.4 13.2Accounts receivable:Customer, less allowance for doubtful accounts of $5.1 and $3.6 171.8 128.0Unbilled utility revenues 143.7 138.1Other, less allowance for doubtful accounts of $0.7 and $2.3 70.5 59.4

Production fuel, at average cost 55.7 42.4Materials and supplies, at average cost 38.0 43.1Gas stored underground, at average cost 92.1 64.9Regulatory assets 86.3 61.7Assets held for sale 802.6 1,301.8Other 98.0 87.8

1,783.4 2,142.8

Investments:Investments in unconsolidated foreign entities 188.6 442.3Investment in American Transmission Company LLC 152.4 141.5Other 89.1 182.1

430.1 765.9

Other assets:Regulatory assets 349.2 392.9Deferred charges and other 304.2 308.3

653.4 701.2

Total assets $7,733.1 $8,275.2


59



ALLIANT ENERGY CORPORATIONCONSOLIDATED BALANCE SHEETS (Continued)

December 31,CAPITALIZATION AND LIABILITIES 2005 2004

(in millions, except pershare and share amounts)

Capitalization (Refer to Consolidated Statements of Capitalization):Common stock - $0.01 par value - authorized 240,000,000 shares;outstanding 117,035,793 and 115,741,816 shares $1.2 $1.2

Additional paid-in capital 1,788.7 1,762.1Retained earnings 742.3 871.9Accumulated other comprehensive loss (84.6) (67.1)Shares in deferred compensation trust - 258,214 and 246,572 sharesat an average cost of $27.41 and $27.36 per share (7.1) (6.7)

Total common equity 2,440.5 2,561.4

Cumulative preferred stock of subsidiaries, net 243.8 243.8Long-term debt, net (excluding current portion) 1,914.8 2,289.4

4,599.1 5,094.6

Current liabilities:Current maturities 151.7 96.5Variable rate demand bonds 39.1 39.1Commercial paper 263.0 83.0Accounts payable 355.3 264.2Regulatory liabilities 96.2 27.6Accrued interest 47.4 45.4Accrued taxes 115.1 101.3Liabilities held for sale 328.2 551.3Other 184.3 138.2

1,580.3 1,346.6

Other long-term liabilities and deferred credits:Deferred income taxes 529.3 775.5Deferred investment tax credits 38.7 44.0Regulatory liabilities 548.2 610.3Pension and other benefit obligations 256.7 185.8Other 176.3 213.6

1,549.2 1,829.2

Minority interest 4.5 4.8

Commitments and contingencies (Note 11)Total capitalization and liabilities $7,733.1 $8,275.2




60

ALLIANT ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)Continuing Operations:Cash flows from operating activities:Net income (loss) ($7.7) $145.5 $183.5Adjustments to reconcile net income (loss) to net cash flows from operating activities:(Income) loss from discontinued operations, net of tax 64.1 72.9 (37.8)Distributions from discontinued operations 47.1 20.2 5.9Depreciation and amortization 320.3 316.9 286.8Other amortizations 60.1 65.5 72.4Deferred tax expense (benefit) and investment tax credits (61.2) 57.3 60.3Equity income from unconsolidated investments, net (59.6) (34.3) (17.6)Distributions from equity method investments 35.8 33.7 22.2Loss on early extinguishment of debt 54.4 8.9 16.9Non-cash valuation charges 338.0 2.9 4.6Other (4.3) (30.2) (24.3)

Other changes in assets and liabilities:Accounts receivable (85.5) (16.2) (52.1)Sale of utility accounts receivable 25.0 (101.0) (26.0)Income tax receivable 16.5 3.8 75.5Gas stored underground (27.2) (15.6) (13.2)Regulatory assets 15.9 (104.2) (78.9)Accounts payable 94.5 34.5 1.8Accrued taxes 13.8 35.3 (34.5)Regulatory liabilities (45.5) (12.9) 1.2Deferred income taxes (151.0) (4.5) (46.9)Benefit obligations and other (43.3) 19.7 38.8

Net cash flows from operating activities 600.2 498.2 438.6

Cash flows used for investing activities:Construction and acquisition expenditures:

Utility business (457.2) (538.6) (580.8)Non-regulated businesses (60.3) (79.4) (225.2)Alliant Energy Corporate Services, Inc. and other (10.1) (15.4) (9.6)

Purchases of emission allowances (70.7) -- --Sales of emission allowances 74.0 -- --Proceeds from other asset sales 123.6 42.3 522.4Purchases of securities within nuclear decommissioning trusts (83.6) (244.6) (206.6)Sales of securities within nuclear decommissioning trusts 151.2 376.4 196.1Changes in restricted cash within nuclear decommissioning trusts (21.1) (146.8) (3.6)



Capital repayment from discontinued operations 30.0 -- --Other 35.3 (28.4) 38.5

Net cash flows used for investing activities (288.9) (634.5) (268.8)

Cash flows from (used for) financing activities:Common stock dividends (121.9) (114.0) (101.3)Proceeds from issuance of common stock 29.3 115.1 345.6Proceeds from issuance of preferred stock of subsidiary -- -- 38.7Proceeds from issuance of long-term debt 255.8 293.6 335.0Reductions in long-term debt (571.9) (109.5) (367.1)Net change in commercial paper and other short-term borrowings 180.0 (24.5) (173.0)Net change in loans with discontinued operations (15.6) 32.9 (48.9)Debt repayment premiums (50.4) (8.2) (15.6)Other (13.7) (26.1) (23.6)

Net cash flows from (used for) financing activities (308.4) 159.3 (10.2)

Net increase in cash and temporary cash investments 2.9 23.0 159.6Cash and temporary cash investments at beginning of period 202.4 179.4 19.8

Cash and temporary cash investments at end of period $205.3 $202.4 $179.4

Discontinued Operations:Net cash flows from (used for) operating activities ($34.8) $43.1 $28.0Net cash flows used for investing activities (27.1) (7.6) (25.3)Net cash flows from (used for) financing activities 10.4 (36.2) 1.0

Net increase (decrease) in cash and temporary cash investments (51.5) (0.7) 3.7Cash and temporary cash investments classified as held for sale at beginning of period 62.2 62.9 59.2

Cash and temporary cash investments classifed as held for sale at end of period $10.7 $62.2 $62.9


61

ALLIANT ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF CAPITALIZATION

December 31,2005 2004

(in millions)

Common equity (Refer to Consolidated Balance Sheets) $2,440.5 $2,561.4

Cumulative preferred stock of subsidiaries, net (Note 7(b)) 243.8 243.8



Long-term debt, net:Utility:

First Mortgage Bonds:8%, due 2007 25.0 25.03.8% variable rate at Dec. 31, 2005, due 2014 8.5 8.53.7% to 3.88% variable rates at Dec. 31, 2005, due 2015 30.6 30.67.6%, matured in 2005 - 72.02.5% variable rate at Dec. 31, 2004, matured in 2005 - 16.0

64.1 152.1Collateral Trust Bonds:7.25%, due 2006 60.0 60.06.875%, due 2007 55.0 55.06%, due 2008 50.0 50.05.5% to 7%, retired early in 2005 - 69.4

165.0 234.4Other:Debentures, 7%, due 2007 105.0 105.0Pollution control revenue bonds, 3.5% to 6.25% fixed/variable rates at Dec. 31, 2005,

due 2008 to 2023 54.9 45.9Debentures, 5.7%, due 2008 60.0 60.0Senior debentures, 6.625%, due 2009 135.0 135.0Debentures, 7.625%, due 2010 100.0 100.0Senior debentures, 6.75%, due 2011 200.0 200.0Senior debentures, 5.875%, due 2018 100.0 100.0Senior debentures, 5.5%, due 2025 50.0 -Senior debentures, 6.45%, due 2033 100.0 100.0Senior debentures, 6.3%, due 2034 125.0 125.0Debentures, 6.25%, due 2034 100.0 100.0

1,129.9 1,070.9

Total utility, gross 1,359.0 1,457.4Less:Current maturities (60.0) (90.7)Variable rate demand bonds (39.1) (39.1)Unamortized debt discount, net (2.3) (3.0)

Total domestic utility, net 1,257.6 1,324.6

Non-regulated and other:Alliant Energy Neenah, LLC credit facility, 6.03% at Dec. 31, 2005, due 2006 to 2010 43.8 49.5Alliant Energy New Zealand Ltd. non-recourse redeemable preference shares(NZ$100 denomination), 6.765%, due 2007 68.3 71.8

Alliant Energy New Zealand Ltd. non-recourse redeemable preference shares(NZ$140 denomination), 6.844%, due 2008 95.6 -

Alliant Energy Corporate Services, Inc. senior notes, 4.55%, due 2008 75.0 75.0Alliant Energy Resources, Inc. senior notes, 7%, due 2011, partially retired early in 2005 83.0 258.0Alliant Energy Resources, Inc. senior notes, 9.75%, due 2013 275.0 275.0Sheboygan Power, LLC non-recourse senior notes, 5.06%, due 2006 to 2024 69.7 -



Alliant Energy Resources, Inc. exchangeable senior notes, 2.5%, due 2030 402.5 402.5Alliant Energy Resources, Inc. senior notes, 7.375%, retired early in 2005 - 204.0Other, 1% to 6%, due 2006 to 2033 3.4 3.6

Total non-regulated and other, gross 1,116.3 1,339.4

Less:Current maturities (91.7) (5.8)Unamortized debt discount, net (367.4) (368.8)

Total non-regulated and other, net 657.2 964.8

Total long-term debt, net 1,914.8 2,289.4

Total capitalization $4,599.1 $5,094.6


62

ALLIANT ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY

Accumulated Shares in

Additional Other Deferred Total

Common Paid-In Retained Comprehensive Compensation Common

Stock Capital Earnings Income (Loss) Trust Equity

(in millions)

2003:

Beginning balance (a) $0.9 $1,293.9 $758.2 ($209.9) ($6.9) $1,836.2

Net income 183.5 183.5

Unrealized holding gains on securities, net of tax of $6.5 11.2 11.2

Less: reclassification adjustment for gains

included in net income, net of tax of $1.4 2.4 2.4

Net unrealized gains on securities 8.8 8.8

Foreign currency translation adjustments, net of tax of ($6.8) 88.9 88.9



Net foreign currency translation adjustments 83.6 83.6

Minimum pension liability adjustments, net of tax of $4.3 6.3 6.3

Unrealized holding losses on derivatives, net of tax of ($0.9) (1.7) (1.7)

Less: reclassification adjustment for losses

included in net income, net of tax of ($3.8) (6.5) (6.5)



Net unrealized gains on qualifying derivatives 4.8 4.8

Total comprehensive income 287.0

Common stock dividends (101.3) (101.3)

Common stock issued and other 0.2 349.7 (0.5) 349.4

Ending balance 1.1 1,643.6 840.4 (106.4) (7.4) 2,371.3

2004:

Net income 145.5 145.5




Net unrealized losses on securities (0.9) (0.9)

Foreign currency translation adjustments, net of tax of $5.2 24.7 24.7

Minimum pension liability adjustments, net of tax of $10.1 15.6 15.6

Unrealized holding gains on derivatives, net of tax of $0.2 0.3 0.3



Net unrealized losses on qualifying derivatives (0.1) (0.1)

Total comprehensive income 184.8


Common stock issued and other 0.1 118.5 0.7 119.3

Ending balance 1.2 1,762.1 871.9 (67.1) (6.7) 2,561.4

2005:

Net loss (7.7) (7.7)



included in net loss, net of tax of ($0.2) (0.4) (0.4)

Net unrealized gains on securities 0.8 0.8

Foreign currency translation adjustments, net of tax of $33.6 11.7 11.7


included in net loss, net of tax of $1.4 2.0 2.0

Net foreign currency translation adjustments 9.7 9.7

Minimum pension liability adjustments, net of tax of ($16.6) (29.5) (29.5)

Unrealized holding gains on derivatives, net of tax of $0.5 1.0 1.0




included in net loss, net of tax of ($0.4) (0.5) (0.5)

Net unrealized gains on qualifying derivatives 1.5 1.5

Total comprehensive loss (25.2)


Common stock issued and other 26.6 (0.4) 26.2

Ending balance $1.2 $1,788.7 $742.3 ($84.6) ($7.1) $2,440.5

(a)Accumulated other comprehensive loss at Jan. 1, 2003 consisted of $4.1 of net unrealized gains on securities, ($164.6) of foreign currency translation adjustments,

($43.6) of minimum pension liability adjustments and ($5.8) of net unrealized losses on qualifying derivatives.


63

ALLIANT ENERGY CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) General - The consolidated financial statements include the accounts of Alliant Energy Corporation (Alliant Energy) and its consolidatedsubsidiaries. Alliant Energy is an investor-owned public utility holding company, whose primary subsidiaries are Interstate Power and LightCompany (IPL), Wisconsin Power and Light Company (WPL), Alliant Energy Resources, Inc. (Resources) and Alliant Energy CorporateServices, Inc. (Corporate Services). IPL and WPL are utility subsidiaries that are engaged principally in the generation, transmission (IPLonly), distribution and sale of electric energy; and the purchase, distribution, transportation and sale of natural gas in Iowa, Wisconsin,Minnesota as well as the utility operations of Illinois properties that Alliant Energy is divesting. Resources (through its numerous direct andindirect subsidiaries) is comprised of Non-regulated Generation, International and other non-regulated investments. Non-regulated Generationmanages Alliant Energy�s non-regulated electric generating facilities and currently owns: a 309 megawatt (MW), non-regulated, tolled(through May 2008), natural gas-fired power plant in Neenah, Wisconsin; the 300 MW simple-cycle, natural gas-fired Sheboygan FallsEnergy Facility (SFEF) near Sheboygan Falls, Wisconsin that WPL leases; several standby generators in Iowa; and a steam turbine.International holds investments involved in energy generation, delivery and infrastructure in New Zealand as well as the remaining generatingfacilities in China that Alliant Energy is divesting. Refer to Note 9 for information on Alliant Energy�s sale of all its investments in Brazil inJanuary 2006. Other non-regulated investments include investments in environmental engineering and site remediation, transportation,construction management services for wind farms and several other modest investments, as well as a master-planned resort community(Laguna del Mar) in Mexico and two gas gathering pipeline systems that Alliant Energy is divesting. Corporate Services is the subsidiaryformed to provide administrative services to Alliant Energy and its subsidiaries. Refer to Note 16 for information on various businessesreported as discontinued operations and assets and liabilities held for sale in Alliant Energy�s Consolidated Financial Statements.

The consolidated financial statements reflect investments in controlled subsidiaries on a consolidated basis. All significant intercompanybalances and transactions, other than certain energy-related transactions affecting IPL and WPL, have been eliminated from the consolidatedfinancial statements. Such energy-related transactions not eliminated are made at prices that approximate market value and the associatedcosts are recoverable from customers through the rate making process. The consolidated financial statements are prepared in conformity withaccounting principles generally accepted in the United States of America (U.S.), which give recognition to the rate making and accountingpractices of the Federal Energy Regulatory Commission (FERC) and state commissions having regulatory jurisdiction. The preparation of theconsolidated financial statements requires management to make estimates and assumptions that affect: a) the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities at the date of the financial statements; and b) the reported amounts of revenues



and expenses during the reporting period. Actual results could differ from those estimates. Certain prior period amounts have been reclassifiedon a basis consistent with the current year presentation. Most reclassifications relate to the reporting of discontinued operations and assets andliabilities held for sale pursuant to Statement of Financial Accounting Standards (SFAS) 144, �Accounting for the Impairment or Disposal ofLong-lived Assets� (SFAS 144). Unless otherwise noted, the notes herein have been revised to exclude discontinued operations and assets andliabilities held for sale for all periods presented.

Unconsolidated investments for which Alliant Energy does not control, but does have the ability to exercise significant influence overoperating and financial policies (generally, 20% to 50% voting interest), are accounted for under the equity method of accounting. Theseinvestments are stated at acquisition cost, increased or decreased for Alliant Energy�s equity in net income or loss, which is included in�Equity income from unconsolidated investments� in the Consolidated Statements of Income, and decreased for any dividends received.These investments are also increased or decreased for Alliant Energy�s proportionate share of the investee�s other comprehensive income(loss), which is included in �Accumulated other comprehensive loss� on the Consolidated Balance Sheets. Investments that do not meet thecriteria for consolidation or the equity method of accounting are accounted for under the cost method.

(b) Regulation - Alliant Energy, IPL and WPL are subject to regulation by the Securities and Exchange Commission, FERC, state regulatorycommissions and the U.S. Environmental Protection Agency (EPA). Resources is subject to regulation by the New Zealand ElectricityCommission for its New Zealand investments. Alliant Energy and its subsidiaries are also subject to regulation by various other federal, stateand local agencies.

64

(c) Regulatory Assets and Liabilities - Alliant Energy is subject to the provisions of SFAS 71, �Accounting for the Effects of Certain Typesof Regulation,� which provides that rate-regulated public utilities record certain costs and credits allowed in the rate making process indifferent periods than for non-regulated entities. These are deferred as regulatory assets or accrued as regulatory liabilities and are recognizedin the Consolidated Statements of Income at the time they are reflected in rates.

Regulatory Assets - At Dec. 31, regulatory assets were comprised of the following items (in millions):


Tax-related (Note 1(d)) $124.6 $251.1 $110.6 $230.9 $14.0 $20.2Environmental-related (Note 11(e)) 45.9 49.3 36.9 36.4 9.0 12.9Minimum pension liability (Note 6(a)) 45.9 39.4 -- -- 45.9 39.4Asset retirement obligations (Note 19) 32.5 0.9 21.8 -- 10.7 0.9Energy conservation program costs 27.5 36.1 18.2 21.8 9.3 14.3Derivatives (Note 10(a)) 27.2 10.6 6.7 3.9 20.5 6.7Debt redemption costs 24.3 22.8 15.2 13.2 9.1 9.6Kewaunee Nuclear Power Plant

(Kewaunee) outage in 2005 19.4 -- -- -- 19.4 --Fuel cost recovery (Note 1(i)) 18.3 4.6 18.3 4.1 -- 0.5Kewaunee sale (Note 17) 16.1 1.5 -- -- 16.1 1.5Excess allowance for funds used during

construction (AFUDC) (Note 1(g)) 12.4 11.9 -- -- 12.4 11.9Coal delivery disruptions 12.3 -- -- -- 12.3 --Other 29.1 26.4 6.2 9.0 22.9 17.4

$435.5 $454.6 $233.9 $319.3 $201.6 $135.3

A portion of the regulatory assets in the previous table are not earning a return. These regulatory assets are expected to be recovered fromcustomers in future rates, however the carrying costs of these assets are borne by Alliant Energy�s shareowners. At Dec. 31, 2005 and 2004,the regulatory assets that were not earning returns were as follows (in millions):



IPL WPL2005 2004 2005 2004

Regulatory assets not earning returns $21 $22 $8 $11Weighted average remaining life (in years) 15 14 5 4

Asset Retirement Obligations - Alliant Energy believes it is probable that any differences between expenses for legal asset retirementobligations (AROs) calculated under SFAS 143, �Accounting for Asset Retirement Obligations� (SFAS 143) and Financial AccountingStandards Board (FASB) Interpretation No. (FIN) 47, �Accounting for Conditional Asset Retirement Obligations - an interpretation of SFAS143� (FIN 47), and expenses recovered currently in rates will be recoverable in future rates, and is deferring the difference as a regulatoryasset.

Kewaunee Outage in 2005 - WPL received approval from the Public Service Commission of Wisconsin (PSCW) to defer, beginning April 15,2005, incremental fuel-related costs associated with the extension of an unplanned outage at Kewaunee, which occurred from February 2005to early July 2005. The PSCW also approved the deferral of incremental operation and maintenance costs related to the unplanned outage.

Kewaunee Sale - WPL has received approval from the PSCW to defer all gains, losses, and transaction costs associated with the sale ofKewaunee. In July 2005, WPL completed the sale of its interest in Kewaunee and recognized a loss (excluding the benefits of the non-qualified decommissioning trust assets discussed in �Regulatory Liabilities�), including transaction costs, of $16 million from the sale. InDecember 2005, the PSCW issued a final order associated with Wisconsin Public Service Corporation�s (WPSC�s) 2006 base rate case,which only allowed WPSC recovery from its customers of 50% of the loss it recognized on the sale of its interest in Kewaunee. WPL will beseeking full recovery of the loss associated with the sale of its interest in Kewaunee in its next base rate case.

Coal Delivery Disruptions - WPL received approval from the PSCW to defer, beginning Aug. 3, 2005, incremental purchased power energycosts associated with coal conservation efforts at WPL due to coal delivery disruptions. The coal delivery disruptions were caused by railroadtrain derailments in Wyoming that caused damage to heavily-used joint railroad lines that supply coal to numerous generating facilities in theU.S., including facilities owned by WPL.

65

Alliant Energy periodically assesses whether its regulatory assets are probable of future recovery by considering factors such as regulatoryenvironment changes, recent rate orders issued by the applicable regulatory agencies and the status of any pending or potential deregulationlegislation. Alliant Energy records charges against those regulatory assets that are no longer probable of future recovery. At Dec. 31, 2005,Alliant Energy and WPL recorded regulatory asset charges of $9 million primarily related to the uncertainty regarding the level of recovery ofWPL�s loss on the sale of its interest in Kewaunee. These charges are reflected as a reduction to regulatory assets in the �Other� line in theabove table. While Alliant Energy feels its remaining regulatory assets are probable of future recovery, no assurance can be made that AlliantEnergy will recover these regulatory assets in future rates.

Regulatory Liabilities - At Dec. 31, regulatory liabilities were comprised of the following items (in millions):


Cost of removal obligations $452.7 $497.8 $304.7 $293.4 $148.0 $204.4Emission allowances (Note 14) 29.1 0.9 27.5 -- 1.6 0.9Kewaunee decommissioning trust

assets (Note 17) 70.6 -- -- -- 70.6 --Tax-related (Note 1(d)) 36.1 110.3 18.1 93.3 18.0 17.0Derivatives (Note 10(a)) 29.1 5.3 12.0 0.6 17.1 4.7Gas performance incentive (Note 1(i)

and Note 2) 12.0 15.1 -- -- 12.0 15.1



Other 14.8 8.5 4.0 5.3 10.8 3.2$644.4 $637.9 $366.3 $392.6 $278.1 $245.3

Regulatory liabilities related to cost of removal obligations, to the extent expensed through depreciation rates, reduce rate base. A significantportion of the remaining regulatory liabilities are not used to reduce rate base in the revenue requirement calculations utilized in AlliantEnergy�s rate proceedings.

Cost of Removal Obligations - Alliant Energy collects in rates future removal costs for many assets that do not have an associated legal ARO.Alliant Energy records a regulatory liability for the estimated amounts it has collected in rates for these future removal costs less amountsspent on removal activities.

Emission Allowances - In December 2005, IPL purchased and sold sulfur dioxide (SO2) emission allowances and received net proceeds fromthese transactions of $3 million. In December 2005, the Iowa Utilities Board (IUB) authorized IPL to refund the $3 million of net proceeds toIPL�s customers through the energy adjustment clause and by making donations to community action agencies in 2006. IPL recorded aregulatory liability of $27 million for the portion of the gain on sale of SO2 emission allowances that will offset amortization expense of therelated intangible asset in the periods when the acquired SO2 emission allowances are utilized. Refer to Note 14 for additional information onthe related intangible asset.

Kewaunee Decommissioning Trust Assets - WPL received approval from the PSCW to return the retail portion of the Kewaunee-related non-qualified decommissioning trust assets to customers over a two-year period through reduced rates that were effective beginning in July 2005.The regulatory liability in the above table also includes the wholesale portion of the trust assets, which refund is being addressed in WPL�scurrent wholesale rate case.

Tax-related - In 2002, IPL filed with the Internal Revenue Service (IRS) for a change in method of accounting for tax purposes for 1987through 2001 that would allow a current deduction related to mixed service costs. IPL had previously capitalized and depreciated such costsfor tax purposes over the appropriate tax lives. This change would create a significant current tax benefit that has not been reflected in IPL�sresults of operations pending a decision from the IUB on the required rate making treatment of the benefit. In its April 2003 order, the IUBapproved IPL�s proposed accounting treatment to defer the tax savings as a regulatory liability resulting from the change of accountingmethod until the IRS audit on this issue is complete. The rate making impact will be addressed once the issue is resolved with the IRS. In2005, the IRS issued a revenue ruling which would effectively disallow a significant portion of the deduction initially claimed. As a result,IPL eliminated the regulatory liability associated with the anticipated tax savings and increased its current and deferred tax liabilitiesassociated with the mixed service cost deduction. IPL made an advance payment of $42 million to the IRS in October 2005 to mitigate anyinterest expense it may incur should its deductions not prevail with the IRS.

(d) Income Taxes - Alliant Energy is subject to the provisions of SFAS 109, �Accounting for Income Taxes,� and follows the liabilitymethod of accounting for deferred income taxes, which requires the establishment of deferred tax assets and liabilities, as appropriate, fortemporary differences between the tax basis of assets and liabilities and the amounts reported in the consolidated financial statements.Deferred taxes are recorded using currently enacted tax rates.

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Except as noted below, income tax expense includes provisions for deferred taxes to reflect the tax effects of temporary differences betweenthe time when certain costs are recorded in the accounts and when they are deducted for tax return purposes. As temporary differences reverse,the related accumulated deferred income taxes are reversed to income. Investment tax credits have been deferred and are subsequently creditedto income over the average lives of the related property. Other tax credits reduce income tax expense in the year claimed and are generallyrelated to nonconventional fuel and research and development.

Consistent with Iowa rate making practices for IPL, deferred tax expense is not recorded for certain temporary differences (primarily related toutility property, plant and equipment) because rates are reduced for the current tax benefits. As the deferred taxes become payable (overperiods exceeding 30 years for some generating plant differences) they are recovered through rates. Accordingly, IPL has recorded deferred



tax liabilities and regulatory assets for certain temporary differences, as identified in Note 1(c). In Wisconsin, the PSCW has allowed raterecovery of deferred taxes on all temporary differences since August 1991. WPL established a regulatory asset associated with thosetemporary differences occurring prior to August 1991 that will be recovered in future rates through 2007.

(e) Common Shares Outstanding - A reconciliation of the weighted average common shares outstanding used in the basic and dilutedearnings per average common share (EPS) calculation was as follows (in thousands):

Weighted average common shares outstanding: 2005 2004 2003Basic EPS calculation 116,476 113,274 101,366

Effect of dilutive securities 317 427 178

Diluted EPS calculation 116,793 113,701 101,544

The following options to purchase shares of common stock were excluded from the calculation of diluted EPS as the exercise prices weregreater than the average market price:

2005 2004 2003Options to purchase shares of common stock 2,506,090 3,309,468 3,799,938

Weighted average exercise price of options excluded $29.68 $29.36 $28.68

(f) Temporary Cash Investments and Restricted Cash - Temporary cash investments are stated at cost, which approximates market value,and are considered cash equivalents for the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows. These investmentsconsist of short-term liquid investments that have maturities of less than 90 days. At Dec. 31, 2005 and 2004, short-term restricted cashprimarily related to dividend requirements of non-recourse redeemable preference shares issued by Resources� wholly-owned New Zealandsubsidiary and deposits with trustees. At Dec. 31, 2005 and 2004, Alliant Energy also had $6.2 million and $7.3 million, respectively, of long-term restricted cash primarily related to borrowing requirements for the acquisition and maintenance of Resources� 309 MW power plant inNeenah, Wisconsin.

(g) Property, Plant and Equipment - Utility plant (other than acquisition adjustments) is recorded at original cost, which includes overhead,administrative costs and AFUDC. At Dec. 31, 2005 and 2004, IPL had $18 million and $20 million, respectively, of acquisition adjustments,net of accumulated amortization, included in utility plant ($4.1 million and $4.3 million, respectively, of such balances are currently beingrecovered in IPL�s rates). Ordinary retirements of utility plant and salvage value are netted and charged to accumulated depreciation uponremoval from utility plant accounts and no gain or loss is recognized. Removal costs reduce the regulatory liability previously established. TheAFUDC recovery rates, computed in accordance with the prescribed regulatory formula, were as follows:

2005 2004 2003IPL 7.8% 7.3% 7.9%WPL (PSCW formula - retail jurisdiction) 15.1% 15.2% 14.8%WPL (FERC formula - wholesale jurisdiction) 6.7% 12.5% 9.5%

WPL records a regulatory asset for all retail jurisdiction construction projects equal to the difference between the AFUDC calculated inaccordance with PSCW guidelines and the AFUDC authorized by FERC and amortizes the regulatory asset at a composite rate and time frameestablished during each rate case. The amount of AFUDC generated by equity and debt was as follows (in millions):

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Alliant Energy IPL WPL2005 2004 2003 2005 2004 2003 2005 2004 2003



Equity $6.4 $13.2 $13.5 $3.7 $9.5 $10.6 $2.7 $3.7 $2.9Debt 3.6 5.3 7.2 3.0 4.5 6.1 0.6 0.8 1.1

$10.0 $18.5 $20.7 $6.7 $14.0 $16.7 $3.3 $4.5 $4.0

Electric plant in service by functional category at Dec. 31 was as follows (in millions):


Distribution $2,596.2 $2,419.0 $1,453.1 $1,368.6 $1,143.1 $1,050.4Generation 2,396.1 2,281.7 1,555.8 1,487.8 840.3 793.9Transmission 653.8 629.2 653.8 629.2 -- --Other 241.2 224.9 177.5 163.8 63.7 61.1

$5,887.3 $5,554.8 $3,840.2 $3,649.4 $2,047.1 $1,905.4

IPL and WPL use a combination of remaining life and straight-line depreciation methods as approved by their respective regulatorycommissions. The average rates of depreciation for electric and gas properties, consistent with current rate making practices, were as follows:

IPL WPL2005 2004 2003 2005 2004 2003

Electric 3.5% 3.5% 3.3% 3.6% 3.5% 3.7%Gas 2.6% 2.7% 2.7% 3.8% 4.0% 4.0%

Non-regulated property, plant and equipment is recorded at cost and the majority is related to the Neenah plant and SFEF within AlliantEnergy�s Non-regulated Generation business, which are depreciated using the straight-line method over periods ranging from 30 to 35 years.The remainder is depreciated using the straight-line method over periods ranging from 5 to 30 years. Upon retirement or sale of property, plantand equipment, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in theConsolidated Statements of Income. Alliant Energy capitalized interest of $3.4 million and $5.4 million in 2005 and 2004, respectively,related to SFEF.

(h) Operating Revenues - Revenues from IPL and WPL are primarily from electric and natural gas sales and deliveries and are recordedunder the accrual method of accounting and recognized upon delivery. Revenues from Alliant Energy�s non-regulated businesses areprimarily from the sale of energy or services and are recognized based on output delivered or services provided as specified under contractterms. Certain non-regulated businesses, including WindConnect� and Alliant Energy�s environmental engineering and site remediationbusiness, also account for the revenues of certain contracts on the percentage of completion method. Alliant Energy accrues revenues forservices rendered but unbilled at month-end. Certain of Alliant Energy�s subsidiaries serve as collection agents for sales or various other taxesand record revenues on a net basis. The revenues do not include the collection of the aforementioned taxes.

(i) Utility Fuel Cost Recovery - IPL�s retail tariffs provide for subsequent adjustments to its electric and natural gas rates for changes in thecost of fuel, purchased energy and natural gas purchased for resale. Changes in the under/over collection of these costs are reflected in�Electric production fuel and purchased power� and �Cost of gas sold� in the Consolidated Statements of Income. The cumulative effects arereflected on the Consolidated Balance Sheets as a current regulatory asset or liability, until they are automatically reflected in future billings tocustomers. Recovery of capacity-related charges associated with IPL�s purchased power costs are recovered from electric customers throughchanges in base rates.

WPL�s retail electric rates are based on forecasts of forward-looking test year periods and include estimates of future fuel and purchasedenergy costs anticipated during the test year. During each electric retail rate proceeding, the PSCW sets fuel monitoring ranges based on theforecasted fuel costs used to determine rates. If WPL�s actual fuel costs fall outside these fuel monitoring ranges during the test year period,WPL and/or other parties can request, and the PSCW can authorize an adjustment to future retail electric rates. The PSCW may authorize aninterim rate increase, however if the final rate increase is less than the interim rate increase, WPL would refund the excess collection tocustomers at the current authorized return on equity rate. Recovery of capacity-related charges associated with WPL�s purchased power costsand network transmission charges are recovered from electric customers through changes in base rates. WPL�s wholesale electric rates



provide for subsequent adjustments to rates for changes in the cost of fuel and purchased energy. WPL�s retail gas tariffs provide forsubsequent adjustments to its natural gas rates for changes in the current monthly natural gas commodity price index. Also, WPL has a gasperformance incentive which includes a sharing mechanism whereby 50% of all gains and losses relative to current commodity prices, as wellas other benchmarks, are retained by WPL, with the remainder refunded to or recovered from customers.

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(j) Generating Facility Outages - The IUB allowed IPL to collect, as part of its base revenues, funds to offset other operation andmaintenance expenditures incurred during refueling outages at the Duane Arnold Energy Center (DAEC). These costs included incrementalinternal labor costs, contractor labor and materials directly related to activities performed during the outage. As these revenues were collected,an equivalent amount was charged to other operation and maintenance expense with a corresponding credit to a reserve. During a refuelingoutage, the reserve was reversed to offset the refueling outage expenditures. IPL sold its interest in DAEC in January 2006. Operatingexpenses incurred during refueling outages at Kewaunee were expensed by WPL as incurred. The maintenance costs incurred during outagesfor Alliant Energy�s various other generating facilities are also expensed as incurred.

(k) Translation of Foreign Currency - Assets and liabilities of international investments, where the local currency is the functional currency,have been translated at year-end exchange rates and related income statement results have been translated using average exchange ratesprevailing during the year. Adjustments resulting from translation, including gains and losses on intercompany foreign currency transactions,which are long-term in nature and which Alliant Energy does not intend to settle in the foreseeable future, have been recorded in�Accumulated other comprehensive loss� on Alliant Energy�s Consolidated Balance Sheets.

(l) Derivative Financial Instruments - Alliant Energy uses derivative financial instruments to hedge exposures to fluctuations in interestrates, certain commodity prices and volatility in a portion of electric and natural gas sales volumes due to weather. Alliant Energy does not usesuch instruments for speculative purposes. The fair value of all derivatives are recorded as assets or liabilities on the Consolidated BalanceSheets and gains and losses related to derivatives that are designated and qualify as hedges, are recognized in earnings when the underlyinghedged item or physical transaction is recognized in income. Gains and losses related to derivatives that do not qualify for, or are notdesignated in hedge relationships, are recognized in earnings immediately. A number of Alliant Energy�s derivative transactions are in itsutility business and based on the fuel and natural gas cost recovery mechanisms in place, as well as other specific regulatory authorizations,changes in fair market values of such derivatives generally have no impact on Alliant Energy�s results of operations, as they are generallyreported as changes in regulatory assets and liabilities. Alliant Energy has some commodity purchase and sales contracts that have beendesignated, and qualify for, the normal purchase and sale exception and based on this designation, these contracts are not accounted for asderivative instruments. Refer to Notes 10 and 11(f) for further discussion of Alliant Energy�s derivative financial instruments and relatedcredit risk, respectively.

(m) Accounting for Stock-Based Compensation - Prior to Jan. 1, 2006, Alliant Energy accounted for awards issued under its stock-basedincentive compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion (APB) 25,�Accounting for Stock Issued to Employees� (APB 25). No stock-based compensation cost is reflected in net income in Alliant Energy�sConsolidated Statements of Income for stock options, as all options granted under those plans had an exercise price equal to the quoted marketprice of the underlying common stock on the date of grant. The effect on net income (loss) and EPS if Alliant Energy had applied the fairvalue recognition provisions of SFAS 123, �Accounting for Stock-Based Compensation� (SFAS 123), to awards issued under these plans wasas follows (dollars in millions):

2005 2004 2003Net income (loss), as reported ($7.7) $145.5 $183.5Add: stock-based employee compensation expense

included in reported net income (loss), netof related tax effects 1.8 2.1 2.5

Less: stock-based employee compensation expensedetermined under the fair value-based methodfor all awards, net of related tax effects 2.2 3.8 4.5



Pro forma net income (loss) ($8.1) $143.8 $181.5

EPS (basic):As reported ($0.07) $1.28 $1.81Pro forma ($0.07) $1.27 $1.79

EPS (diluted):As reported ($0.07) $1.28 $1.81Pro forma ($0.07) $1.26 $1.79

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In 2004, the FASB issued revised SFAS 123 guidance, �Share-Based Payment� (SFAS 123(R)), which requires share-based payments toemployees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Alliant Energyadopted SFAS 123(R) on Jan. 1, 2006 using the modified prospective transition method. The impacts of adoption on its financial conditionand results of operations were not material given its limited use of stock options historically and its decision to discontinue using them entirelyeffective Jan. 1, 2005. Refer to Note 6(b) for further discussion.

(n) Pension Plan - For the defined benefit pension plan sponsored by Corporate Services, Alliant Energy allocates pension costs andcontributions to IPL, WPL, Resources and the parent company based on labor costs of plan participants and any additional minimum pensionliability based on each group�s funded status.

(o) Asset Valuations - Long-lived assets to be held and used, excluding regulatory assets, are reviewed for possible impairment wheneverevents or changes in circumstances indicate the carrying value of the assets may not be recoverable. Impairment is indicated if the carryingvalue of an asset exceeds its undiscounted future cash flows. An impairment charge is recognized equal to the amount the carrying valueexceeds the asset�s fair value. The fair value is determined by the use of quoted market prices, appraisals, or the use of other valuationtechniques such as expected discounted future cash flows.

Long-lived assets held for sale are reviewed for possible impairment each reporting period and impairment charges are recorded if the carryingvalue of such asset exceeds the estimated fair value less cost to sell. The fair value is determined by the use of bid information from potentialbuyers, quoted market prices, appraisals, or the use of other valuation techniques such as expected discounted future cash flows.

If events or circumstances indicate the carrying value of investments accounted for under the equity method of accounting may not berecoverable, potential impairment is assessed by comparing the fair value of these investments to their carrying values as well as assessing if adecline in fair value is temporary. If an impairment is indicated, a charge is recognized equal to the amount the carrying value exceeds theinvestment�s fair value.

(p) Supplemental Financial Information - The other (income) and deductions included in �Interest income and other� in Alliant Energy�sConsolidated Statements of Income were as follows (in millions):

2005 2004 2003Interest income:

From loans to discontinued operations ($20.1)($27.6) ($27.9)

Other (15.7)(7.5) (5.8)



Valuation charges 1.5 1.4 2.2Gain on sale of Whiting Petroleum Corporation (WPC) stock -- (14.2) --Gains on other asset sales, net (2.1) (5.6) (5.7)Currency transaction gains, net (3.2) (1.4) (0.9)Other (1.6) 1.9 3.4

($41.2) ($53.0) ($34.7)

The supplemental cash flows information related to continuing operations for Alliant Energy�s Consolidated Statements of Cash Flows was asfollows (in millions):

2005 2004 2003

Cash paid during the period for:

Interest, net of capitalized interest $182.0 $176.7 $196.6

Income taxes, net of refunds 82.7 33.2 16.3

Noncash investing and financing activities:Debt repaid directly by buyer in the sale of Australian business -- -- 127.6Debt assumed by buyer of affordable housing business -- -- 88.0Capital lease obligations incurred 5.9 17.7 14.8

(q) Operating Leases - Alliant Energy has certain purchased power agreements that are accounted for as operating leases. Costs associatedwith these agreements are included in �Electric production fuel and purchased power� in Alliant Energy�s Consolidated Statements of Incomebased on monthly payments for these agreements. Monthly capacity payments related to one of these agreements is higher during the peakdemand period from May 1 through Sep. 30 and lower in all other periods during each calendar year. These seasonal differences in capacitycharges are consistent with market pricing and the expected usage of energy from the plant.

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(r) Emission Allowances - Emission allowances are granted by the EPA to sources of pollution that allow the release of a prescribed amountof pollution each year. Unused emission allowances may be bought and sold or carried forward to be utilized in future years. Purchasedemission allowances are recorded as intangible assets at their original cost and evaluated for impairment as long-lived assets to be held andused in accordance with SFAS 144. Emission allowances granted by the EPA are valued at a zero-cost basis. Amortization of emissionallowances is based upon a weighted average cost for each category of vintage year utilized during the reporting period.

(s) Cash Flows Presentation - Alliant Energy reports cash flows from continuing operations separate from cash flows from discontinuedoperations on its Consolidated Statements of Cash Flows. For continuing operations, Alliant Energy classifies distributions received fromdiscontinued operations as an operating activity to the extent of previous earnings and the excess as an investing activity. Alliant Energyclassifies the net change in loans with discontinued operations as a financing activity. In presenting discontinued operations cash flows,Alliant Energy classifies intercompany cash flows in the same activity category that the cash flows are classified in continuing operations.Refer to Note 16 for additional details of cash flows from discontinued operations.

(t) New Accounting Pronouncements - Refer to Notes 1(m) and 19 for discussion of SFAS 123(R) and FIN 47, respectively.

(2) UTILITY RATE MATTERS



In December 2005, WPL received approval from the PSCW to begin refunding approximately $13 million to its natural gas customers for thecustomers� portion of gains realized from its gas performance incentive program for the period from November 2004 to October 2005.Approximately 80%, or $10 million, of the total expected refund amount was refunded to customers in December 2005 and January 2006. Theremainder of the refund will be completed in 2006 after the PSCW completes its audit of the refund amount. At Dec. 31, 2005, WPL reservedfor all amounts related to these refunds. Refer to Note 1(i) for further discussion of WPL�s fuel cost recovery and Note 1(c) for discussion ofvarious other rate matters.

(3) LEASES(a) Operating Leases - Alliant Energy has entered into various agreements related to property, plant and equipment rights that are accountedfor as operating leases. Alliant Energy�s most significant operating leases relate to certain purchased power agreements. These purchasedpower agreements contain fixed rental payments related to capacity and transmission rights and contingent rental payments related to theenergy portion (actual megawatt-hours (MWh)) of the respective agreements. Rental expenses associated with Alliant Energy�s operatingleases were as follows (in millions):

2005 2004 2003

Operating lease rental expenses (excluding contingent rentals) $107 $77 $38

Contingent rentals related to certain purchased power agreements 28 33 26

Other contingent rentals 2 4 4$137 $114 $68

At Dec. 31, 2005, Alliant Energy�s future minimum operating lease payments, excluding contingent rentals, were as follows (in millions):2006 2007 2008 2009 2010 Thereafter Total

Operating leases:Certain purchased power agreements $77 $78 $71

$62 $56$131

$475

Synthetic leases 26 51 4 7 10 8106

Other 10 9 8 7 5 21 60

Total operating leases $113 $138 $83 $76 $71 $160 $641

The purchased power agreements meeting the criteria as operating leases are such that, over the contract term, Alliant Energy has exclusiverights to all or a substantial portion of the output from a specific generating facility. The purchased power agreements total in the above tableincludes $403 million and $55 million related to the Riverside plant and RockGen plant purchased power agreements, respectively. AlliantEnergy�s agreements with Calpine Corporation (Calpine) subsidiaries related to the RockGen plant and the Riverside plant provide AlliantEnergy the option to purchase these two facilities in 2009 and 2013, respectively. Refer to Note 20 for additional information concerning theimpacts of FIN 46R, �Consolidation of Variable Interest Entities� (FIN 46R), on these two agreements.

The synthetic leases in the above table relate to the financing of certain corporate headquarters, aircraft, utility railcars and a utility radiodispatch system. The entities that lease these assets to Alliant Energy do not meet the consolidation requirements per FIN 46R and are notincluded on Alliant Energy�s Consolidated Balance Sheets. Alliant Energy has guaranteed the residual value of its synthetic leases which total$67 million in the aggregate. The guarantees extend through the maturity of each respective underlying lease with remaining terms up to 10years. Residual value guarantee amounts have been included in the above table.

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(b) Capital Leases - At Dec. 31, 2005 and 2004, IPL had a capital lease covering its 70% undivided interest in nuclear fuel purchased forDAEC. In January 2006, IPL completed the sale of its interest in DAEC and related nuclear fuel to a subsidiary of FPL Energy Group, Inc.and retired its capital lease obligation covering the nuclear fuel. Refer to Note 18 for additional details regarding the sale of DAEC. Annualnuclear fuel lease expenses (included in �Electric production fuel and purchased power� in the Consolidated Statements of Income) for 2005,2004 and 2003 were $15 million, $16 million and $13 million, respectively. At Dec. 31, 2005, Alliant Energy�s future minimum capital leasepayments were as follows (in millions):

Less: Present valueamount of netrepre- minimum

There senting capital lease2006 2007 2008 2009 2010 -after Total interest payments

Capital leases:Nuclear fuel (IPL) $40 $-- $-- $-- $-- $-- $40 $-- $40Other 1 -- -- -- -- 1 2 1 1

Total capital leases $41 $-- $-- $-- $-- $1 $42 $1 $41

At Dec. 31, 2005 and 2004 Alliant Energy�s gross assets under its capital leases and the related accumulated amortization were as follows (inmillions):

2005 2004Gross Assets Accumulated Gross Assets AccumulatedUnder Lease Amortization Under Lease Amortization

Capital leases:Nuclear fuel (IPL) $99 $59 $93 $45Office building (IPL) (a) -- -- 16 1Other 2 1 1 1

$101 $60 $110 $47

(a) In the fourth quarter 2005, IPL purchased this office building under the terms of its capital lease.

(4) SALES OF ACCOUNTS RECEIVABLEIPL participates in a utility customer accounts receivable sale program whereby it may sell up to a maximum amount of $125 million of itsaccounts receivable to a third-party financial institution on a limited recourse basis through wholly-owned and consolidated special purposeentities. Corporate Services acts as a collection agent for the buyer and receives a fee for collection services. Under terms of the agreement,the third-party financial institution purchases the receivables initially for the face amount. IPL makes monthly payments to the third-partyfinancial institution of an amount that varies based on interest rates and length of time the sold receivables remain outstanding. Collections onsold receivables are used to purchase additional receivables. The agreement expires in April 2006. IPL is evaluating whether or not it willcontinue to sell receivables beyond the expiration date of this agreement. IPL accounts for the sale of accounts receivable to the third-partyfinancial institution as sales under SFAS 140, �Accounting for Transfers and Servicing of Financial Assets and Extinguishments ofLiabilities.� The entity that purchases the receivables does not require consolidation per the guidelines of FIN 46R. Retained receivables areavailable to the third-party financial institution to pay any fees or expenses due it, and to absorb all credit losses incurred on any of the soldreceivables. In March 2004, WPL discontinued its participation in the utility customer accounts receivable sales program.

At Dec. 31, 2005 and 2004, IPL had sold $100 million and $75 million of utility customer accounts receivable, respectively. In 2005, 2004and 2003, Alliant Energy received $1.1 billion (all at IPL), $1.0 billion ($1.0 billion at IPL and $30 million at WPL) and $1.8 billion ($1.0billion at IPL and $0.8 billion at WPL), respectively, in aggregate proceeds from the sale of accounts receivable. IPL and WPL used proceedsfrom the sale of accounts receivable and unbilled revenues to maintain flexibility in their capital structures, take advantage of favorable short-term rates and finance a portion of their long-term cash needs. Alliant Energy incurred costs associated with these sales of $3.3 million (all atIPL), $1.7 million ($1.5 million at IPL and $0.2 million at WPL) and $2.6 million ($1.4 million at IPL and $1.2 million at WPL) in 2005,2004 and 2003, respectively.



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(5) INCOME TAXESThe components of �Income tax expense (benefit)� in Alliant Energy�s Consolidated Statements of Income were as follows (in millions):

2005 2004 2003Current tax expense (benefit):

Federal $23.5$36.8 $22.0

State 10.8 20.2 16.4Nonconventional fuel credits (14.4) (6.9) (9.7)

Deferred tax expense (benefit):Federal (47.7) 69.1 64.5State (8.7) (6.7) 0.9Nonconventional fuel credits (7.0) (17.9) (12.9)

Foreign tax expense 1.1 2.5 2.3Research and development tax credits (4.8) (0.7) (1.1)Amortization of investment tax credits (4.8) (5.1) (5.1)Other tax credits (0.9) (0.1) (1.7)

($52.9) $91.2 $75.6

In 2005, Alliant Energy recorded $132 million of tax benefits on non-cash valuation charges related to its Brazil investments, which arereflected in the �Deferred tax expense (benefit)� lines in the above table. Substantially all of the nonconventional fuel credits in the abovetable related to Alliant Energy�s synthetic fuel investment which was sold in the fourth quarter of 2005.

Included in �Cumulative effect of changes in accounting principles, net of tax� in the Consolidated Statements of Income for 2003 wereincome tax benefits of $3.8 million related to the adoption of Emerging Issues Task Force Issue (EITF) 02-3 �Issues Related to Accountingfor Contracts Involved in Energy Trading and Risk Management Activities� (EITF 02-3), and SFAS 143 by Alliant Energy on Jan. 1, 2003.Refer to Note 16 for discussion of taxes associated with Alliant Energy�s discontinued operations.

Alliant Energy�s subsidiaries calculate income tax provisions using the separate return methodology. Separate return amounts are adjusted toreflect state apportionment benefits net of federal tax and the fact that regulations prohibited the retention of tax benefits at the parent levelthrough 2005. Any difference between the separate return methodology and the actual consolidated return is allocated as prescribed in AlliantEnergy�s tax allocation agreement.

The income tax rates shown in the following table were computed by dividing income tax expense (benefit) by income from continuingoperations before income taxes and preferred dividend requirements of subsidiaries (dollars in millions).

2005 2004 2003

Tax Tax Tax

Expense Expense Expense

(Benefit)Rate

(Benefit)Rate

(Benefit)Rate



Statutory federal income tax $7.835.0%

$114.9

35.0%

$85.5

35.0%

Effect of rate making on property related

differences 2.3 10.4 3.4 1.0 9.9 4.1

Foreign operations 1.7 7.7 1.9 0.6 (0.8) (0.3)

State income taxes, net of federal benefits (1.5) (6.8) 9.8 3.0 10.3 4.2

Amortization of investment tax credits (4.8) (21.6) (5.1) (1.6) (5.1) (2.1)

Research and development tax credits (4.8) (21.6) (0.7) (0.2) (1.1) (0.4)

Adjustment of prior period taxes (9.9) (44.6) (4.4) (1.3) (1.4) (0.6)

Reversal of capital loss valuation

allowances (13.4) (60.4) -- -- -- --

Nonconventional fuel credits (21.4) (96.4) (24.8) (7.6) (22.6) (9.3)

Other items, net (8.9) (40.0) (3.8) (1.1) 0.9 0.4

Overall income tax ($52.9) (238.3%) $91.2 27.8% $75.6 31.0%

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In 2005, Alliant Energy recorded $7.4 million of income tax benefits related to the impact of issues resolved in a federal income tax audit,which are reflected in �Adjustment of prior period taxes� in the above table. In 2005, Alliant Energy recorded the reversal of approximately$13 million of deferred tax asset valuation allowances originally recorded prior to 2005 related to a change in Alliant Energy�s anticipatedability to utilize certain capital losses prior to their expiration. Alliant Energy also reduced �Accumulated other comprehensive loss� onAlliant Energy�s Consolidated Balance Sheet by $25 million during 2005 as a result of reversing previously recorded deferred tax assetvaluation allowances related to foreign currency translation losses that are subject to capital loss carryover limitations. Based on additionalinformation that became available in 2005, Alliant Energy currently believes it will generate sufficient capital gains in the future to utilize thetax benefits of all of its federal capital losses, resulting in the reversal of these deferred tax asset valuation allowances. In 2005, Alliant Energyalso reversed $4.5 million of deferred tax asset valuation allowances related to certain state net operating losses that Alliant Energy nowanticipates it will be able to utilize prior to expiration.

The deferred income tax (assets) and liabilities included on the Consolidated Balance Sheets at Dec. 31 arise from the following temporarydifferences (in millions):

2005 2004

Deferred Deferred Tax Deferred Deferred Tax

Tax Assets Liabilities Net Tax Assets Liabilities Net

Property ($26.7) $718.1 $691.4 ($30.4) $768.5 $738.1

Exchangeable senior notes -- 140.6 140.6 -- 189.0 189.0

Investment in American Transmission

Co. LLC (ATC) -- 43.7 43.7 -- 14.0 14.0

Mixed service costs -- -- -- (30.0) -- (30.0)

Emission allowances (15.3) -- (15.3) (0.5) -- (0.5)

Investment in China (25.3) -- (25.3) (2.3) -- (2.3)

Regulatory liability - decommissioning (28.3) -- (28.3) -- -- --

Decommissioning (30.4) -- (30.4) (39.9) -- (39.9)

Net operating losses carryforward (38.7) -- (38.7) (34.9) -- (34.9)

Pension and other benefit obligations (50.1) -- (50.1) (30.0) -- (30.0)

Investment in Brazil (57.3) -- (57.3) -- 3.7 3.7

Federal credit carryforward (65.0) -- (65.0) (64.9) -- (64.9)

Capital losses carryforward (84.5) -- (84.5) (50.1) -- (50.1)

Other (94.3) 91.1 (3.2) (19.3) 29.6 10.3



Subtotal (515.9) 993.5 477.6 (302.3) 1,004.8 702.5

Valuation allowances 47.8 -- 47.8 61.5 -- 61.5

($468.1) $993.5 $525.4 ($240.8) $1,004.8 $764.0

2005 2004

Other current assets ($12.2) ($11.5)

Other current liabilities 8.3 --

Deferred income taxes 529.3 775.5

Total deferred tax (assets) and liabilities $525.4 $764.0

At Dec. 31, 2005, Alliant Energy had the following tax carryforwards: alternative minimum tax credits of $46.0 million, federal capital lossesof $138.4 million, state capital losses of $631.9, net operating losses (primarily state) of $665.1 million, and general business credits of $19.0million. The alternative minimum tax credit carryforwards can be carried forward indefinitely. The majority of the capital loss carryforwardsexpire in 2007. The net operating loss carryforwards have expiration dates ranging from 2006 to 2025 with 86% expiring after 2015. Thegeneral business credit carryforwards have expiration dates ranging from 2022 to 2025. Due to the uncertainty of the realization of certain taxcarryforwards, Alliant Energy has established valuation allowances of $47.8 million and $61.5 million as of Dec. 31, 2005 and 2004,respectively.

U.S. and foreign sources of income (loss) from continuing operations before income taxes were as follows (in millions):

2005 2004 2003U.S. sources $288.5 $279.8 $204.6Foreign sources (285.0) 29.8 22.7

Income from continuing operations before income taxes $3.5 $309.6 $227.3

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(6) BENEFIT PLANS(a) Pension Plans and Other Postretirement Benefits - Alliant Energy has various non-contributory defined benefit pension plans that covera significant number of its employees. Benefits are based on the employees� years of service and compensation. Alliant Energy also providescertain defined benefit postretirement health care and life benefits to eligible retirees. In general, the health care plans are contributory withparticipants� contributions adjusted regularly and the life insurance plans are non-contributory. The assumptions for qualified and non-qualified pension benefits and other postretirement benefits at the measurement date of Sep. 30 were as follows (N/A=Not Applicable):

Pension Benefits Other Postretirement Benefits2005 2004 2003 2005 2004 2003

Discount rate for benefit obligations 5.5% 6% 6% 5.5% 6% 6%Discount rate for net periodic cost 6% 6% 6.75% 6% 6% 6.75%Expected return on plan assets 9% 9% 9% 9% 9% 9%Rate of compensation increase 3.5-4.5% 3.5-4.5% 3.5-4.5% 3.5% 3.5% 3.5%Medical cost trend on covered charges:

Initial trend rate N/A N/A N/A 9% 10% 9.5%Ultimate trend rate N/A N/A N/A 5% 5% 5%

The expected return on plan assets is determined by analysis of forecasted asset class returns as well as actual returns for the plan over the past10 years. An adjustment to the returns to account for active management of the assets is also made in the analysis. The obligations are viewedas long-term commitments. A long-term approach is also used when determining the expected rate of return on assets, which is reviewed onan annual basis. Alliant Energy reduced its expected return on plan assets to 8.5% for the 2006 net periodic cost.



The components of Alliant Energy�s qualified and non-qualified pension benefits and other postretirement benefits costs were as follows (inmillions):


Service cost $20.0 $19.0 $15.8 $11.7 $10.3 $7.6Interest cost 47.4 43.7 43.6 16.0 14.0 14.7Expected return on plan assets (54.6) (46.8) (40.6) (7.0) (6.5) (5.4)Amortization of (*):

Transition obligation (asset) (0.3) (0.3) (0.5) 2.0 2.0 3.7Prior service cost 3.6 3.5 3.2 (1.1) (1.0) (0.3)Actuarial loss 8.8 7.5 8.7 6.5 4.8 2.6

Special termination benefits 0.6 0.3 0.3 1.8 -- --$25.5 $26.9 $30.5 $29.9 $23.6 $22.9

* Unrecognized net actuarial losses in excess of 10% of the projected benefit obligation and unrecognized prior service costs are amortizedover the average future service lives of the participants. Unrecognized net transition obligations related to other postretirement benefits areamortized over a 20-year period ending 2012.

The assumed medical trend rates are critical assumptions in determining the service and interest cost and accumulated postretirement benefitobligation related to postretirement benefits costs. A 1% change in the medical trend rates for 2005, holding all other assumptions constant,would have the following effects (in millions):

1% Increase 1% DecreaseEffect on total of service and interest cost components

$3.1 ($2.7)

Effect on postretirement benefit obligation $22.8 ($20.8)

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A reconciliation of the funded status of Alliant Energy�s qualified and non-qualified pension benefit and other postretirement benefit plans tothe amounts recognized on Alliant Energy�s Consolidated Balance Sheets at Dec. 31 was as follows (in millions):

Pension Benefits OtherPostretirement

Benefits2005 2004 2005 2004

Change in projected benefit obligation:Net projected benefit obligation at beginning of year $788.5 $721.0 $262.4 $242.4Service cost 20.0 19.0 11.7 10.3Interest cost 47.4 43.7 16.0 14.0

Plan participants� contributions-

--

-2.3 2.0

Plan amendments-

-5.7 (1.2) (2.2)

Actuarial loss (gain) 100.2 36.5 (15.2) 11.2

Special termination benefits0.6 0.3 1.8 -

-Gross benefits paid (41.0) (37.7) (17.3) (15.3)



Net projected benefit obligation at end of year 915.7 788.5 260.5 262.4

Change in plan assets:Fair value of plan assets at beginning of year 623.9 530.6 91.5 78.3Actual return on plan assets 71.8 60.8 7.5 7.1Employer contributions 9.9 70.2 17.5 19.4


--

-2.3 2.0

Gross benefits paid (41.0) (37.7) (17.3) (15.3)

Fair value of plan assets at end of year 664.6 623.9 101.5 91.5

Funded status at end of year (251.1) (164.6) (159.0) (170.9)Unrecognized net actuarial loss 264.4 190.2 74.5 96.7Unrecognized prior service cost 21.1 24.6 (4.2) (5.7)Unrecognized net transition obligation (asset) (0.2) (0.5) 12.2 15.9

Net amount recognized at end of year $34.2 $49.7 ($76.5) ($64.0)

Amounts recognized on the ConsolidatedBalance Sheets consist of:

Prepaid benefit cost $66.7 $76.0 $3.8 $2.1Accrued benefit cost (32.5) (26.3) (80.3) (66.1)

Additional minimum liability(142.8) (91.8) -

--

-

Intangible asset13.6 15.1 -

--

-

Regulatory asset

45.9 39.4 -- -

-

Accumulated other comprehensive loss

83.3 37.3 -- -

-

Net amount recognized at measurement date 34.2 49.7 (76.5) (64.0)

Contributions paid after Sep. 30 and prior to Dec. 31 0.6 0.7 5.7 3.9

Net amount recognized at Dec. 31 $34.8 $50.4 ($70.8) ($60.1)

In 2004, the PSCW authorized Wisconsin utilities to record additional minimum pension liability to �Regulatory assets� in lieu of�Accumulated other comprehensive loss� on their Consolidated Balance Sheets.

The funded status of the qualified pension plans based on the projected benefit obligation at Sep. 30, 2005 and 2004 was ($198) million and($115) million, respectively. The decrease in funded status from Sep. 30, 2004 to Sep. 30, 2005 was primarily due to a significant increase inthe projected benefit obligation resulting from lowering the discount rate from 6.0% to 5.5% and updating the participant life expectancyassumptions. Included in the following table are Alliant Energy�s accumulated benefit obligations, aggregate amounts applicable to pensionand other postretirement benefits with accumulated benefit obligations in excess of plan assets, as well as pension plans with projected benefitobligations in excess of plan assets as of the measurement date of Sep. 30 (in millions):

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Pension Benefits Other PostretirementBenefits

2005 2004 2005 2004Accumulated benefit obligation $833.0 $715.4 $260.5 $262.4Plans with accumulated benefit obligations in excess

of plan assets:Accumulated benefit obligations 621.3 533.6 259.0 260.7Fair value of plan assets 450.0 431.1 97.8 88.1

Plans with projected benefit obligations in excessof plan assets:

Projected benefit obligations 915.7 788.5 N/A N/AFair value of plan assets 664.6 623.9 N/A N/A

Alliant Energy�s net periodic benefit cost is primarily included in �Utility - other operation and maintenance� in Alliant Energy�sConsolidated Statements of Income. Alliant Energy calculates the fair value of plan assets by using the straight market value of assetsapproach.

Postretirement benefit plans are funded via specific assets within certain retirement plans (401(h) assets) as well as Voluntary Employees�Beneficiary Association (VEBA) trusts. The asset allocation of the 401(h) assets mirrors the pension plan assets and the asset allocation of theVEBA trusts are reflected in the table below under �Other Postretirement Plans.� The asset allocation for Alliant Energy�s pension and otherpostretirement benefit plans at Sep. 30, 2005 and 2004, and the pension plan target allocation for 2005 were as follows:

Pension Plans Other Postretirement PlansTarget Percentage of Plan Percentage of Plan

Allocation Assets at Sep. 30, Assets at Sep. 30,

Asset Category 2005 2005 2004 2005 2004Equity securities 65-75% 72% 73% 51% 42%Debt securities 20-35% 28% 27% 32% 33%Other 0-5% -- -- 17% 25%

100% 100% 100% 100%

For the various Alliant Energy pension and postretirement plans, Alliant Energy common stock represented less than 1% of total plan assets atDec. 31, 2005 and 2004. Alliant Energy�s plan assets are managed by outside investment managers. Alliant Energy�s investment strategy andits policies employed with respect to pension and postretirement assets is to combine both preservation of principal and prudent andreasonable risk-taking to protect the integrity of the assets in meeting the obligations to the participants while achieving the optimal returnpossible over the long-term. It is recognized that risk and volatility are present to some degree with all types of investments; however, highlevels of risk are minimized at the total fund level. This is accomplished through diversification by asset class, number of investments, andsector and industry limits when applicable.

For the pension plans, the mix among asset classes is controlled by long-term asset allocation targets. The assets are viewed as long-term withmoderate liquidity needs. Historical performance results and future expectations suggest that equity securities will provide higher totalinvestment returns than debt securities over a long-term investment horizon. Consistent with the goals to maximize returns and minimize riskover the long-term, the pension plans have a long-term investment posture more heavily weighted towards equity holdings. The assetallocation mix is monitored quarterly and appropriate action is taken as needed to rebalance the assets within the prescribed range. Assetsrelated to postretirement plans are viewed as long-term. A mix of both equity and debt securities are utilized to maximize returns andminimize risk over the long-term. Prohibited investment vehicles related to the pension and postretirement plans include, but may not belimited to, direct ownership of real estate, real estate investment trusts, options and futures unless specifically approved, margin trading, oiland gas limited partnerships, commodities, short selling and securities of the managers� firms or affiliate firms.



Alliant Energy estimates that funding for the pension and postretirement benefit plans during 2006 will be $80 million and $19 million,respectively.

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The expected benefit payments and Medicare subsidies, which reflect expected future service, as appropriate, are as follows:

2006 2007 2008 2009 2010 2011 - 2015Pension benefits $43.0 $47.6 $46.0 $49.1 $50.8 $315.3Other benefits 16.5 17.4 18.3 19.3 20.0 116.9Medicare subsidies (1.2) (1.3) (1.4) (1.5) (1.5) (9.0)

$58.3 $63.7 $62.9 $66.9 $69.3 $423.2

In 2004, Alliant Energy adopted FASB Staff Position No. SFAS 106-2, �Accounting and Disclosure Requirements Related to the MedicarePrescription Drug, Improvement and Modernization Act of 2003� (FSP 106-2). In 2005, the U.S. Department of Health and Human Services(Centers for Medicare & Medicaid Services) published regulations regarding actuarial equivalence. Alliant Energy believes that a substantialportion of its postretirement medical plans will be actuarially equivalent to the Medicare Prescription Drug Plan. Alliant Energy anticipatescontinuing its current prescription drug coverage for currently covered retirees and therefore should be eligible for the subsidy available fromMedicare. As a result of the adoption of FSP 106-2, the estimated reductions in Alliant Energy�s, IPL�s and WPL�s 2005 and 2004accumulated projected benefit obligation and other postretirement benefits costs were as follows:


Accumulated projected benefit obligation $33.4 $19.7 $16.8 $11.6 $13.9 $6.8Other postretirement benefits costs 4.8 3.0 2.1 1.6 2.1 1.0

Alliant Energy, IPL and WPL have various life insurance policies that cover certain key employees and directors. At Dec. 31, the cashsurrender value of these investments was as follows:


Cash surrender value $39.5 $36.8 $12.2 $11.1 $11.2 $10.7

Under Alliant Energy�s deferred compensation plans, certain key employees and directors can defer part or all of their current compensationin company stock or interest accounts, which are held in grantor trusts. At Dec. 31, 2005 and 2004, the fair market value of the trusts totaled$7.6 million and $8.0 million, respectively, the majority of which consisted of Alliant Energy common stock.

A significant number of Alliant Energy, IPL and WPL employees also participate in a defined contribution pension plan (401(k) plan), ofwhich Alliant Energy common stock represented 22.0% and 23.7% of total plan assets at Dec. 31, 2005 and 2004, respectively. AlliantEnergy�s, IPL�s and WPL�s contributions to the 401(k) plan, which are based on the participants� level of contribution, were as follows:


401(k) plan contributions $8.8 $9.3 $8.0 $2.2 $2.2 $2.0 $2.4 $2.3 $2.1

Alliant Energy�s pension plans include a cash balance plan that covers substantially all of its non-bargaining unit employees. In the firstquarter of 2006, Alliant Energy has announced amendments to the cash balance plan which include freezing plan participation at its currentlevel and discontinuing additional contributions into employee�s cash balance plan accounts effective August 2008. Alliant Energy has alsoannounced plans to increase its level of contributions to the 401(k) plan effective in August 2008 which will offset the impact of discontinuingadditional contributions into the employee�s cash balance plan accounts. These amendments are designed to provide employees portability



and self-directed flexibility of their retirement benefits. Alliant Energy is currently assessing the future impacts of these changes and does notcurrently expect these changes will have a significant impact on its future results of operations.

(b) Equity Incentive Plans - Alliant Energy has a 2002 Equity Incentive Plan (EIP) that permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units to keyemployees. At Dec. 31, 2005, non-qualified stock options, restricted stock and performance shares were outstanding under the EIP and apredecessor plan under which new awards can no longer be granted. At Dec. 31, 2005, approximately 1.4 million shares were available forissuance under the EIP.

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Non-qualified Stock Options - Options granted to date under the plans were granted at the quoted market price of the shares on the date ofgrant, vest over three years and expire no later than 10 years after the grant date. Options become fully vested upon retirement and remainexercisable at any time prior to their expiration date, or for three years after the effective date of the retirement, whichever period is shorter.Options become fully vested upon death or disability and remain exercisable at any time prior to their expiration date, or for one year after theeffective date of the death or disability, whichever period is shorter. Participants� options that are not vested become forfeited whenparticipants leave Alliant Energy and their vested options expire after three months. A summary of the stock option activity is as follows:

2005 2004 2003Weighted Weighted WeightedAverage Average AverageExercise Exercise Exercise

Shares Price Shares Price Shares PriceOutstanding at beginning of year 4,478,446 $26.85 4,216,714 $26.74 3,842,136 $29.48Options granted -- -- 679,566 25.81 957,200 16.82Options exercised (410,551) 23.45 (174,975) 18.48 -- --Options forfeited (374,132) 28.19 (242,859) 28.16 (582,622) 28.49Options expired (29,950) 27.50 -- -- -- --Outstanding at end of year 3,663,813 27.08 4,478,446 26.85 4,216,714 26.74Exercisable at end of year 3,120,410 28.04 3,061,419 28.72 2,514,908 29.68

The weighted-average remaining contractual life of outstanding options at Dec. 31, 2005, 2004 and 2003 was 5 years, 6 years and 7 years,respectively. Additional information as of Dec. 31, 2005 is as follows:

Options Outstanding Options ExercisableRange of Weighted Average Weighted Average Weighted Average

Exercise Prices Options Exercise Price Remaining Contractual Life Options Exercise Price$16.82 541,215 $16.82 7 years 310,341 $16.82

$24.90-$25.93 478,242 25.13 8 years 165,713 25.12$27.79-$28.59 1,282,130 28.12 5 years 1,282,130 28.12$29.81-$31.56 1,362,226 30.87 4 years 1,362,226 30.87

No options were granted during 2005. The value of the options granted during 2004 and 2003 using the Black-Scholes pricing method was asfollows:

2004 2003Value of options $3.74 $1.94Volatility 21.6% 22.8%Risk free interest rate 3.3% 3.5%Expected life 7 years 7 years



Expected dividend yield on date of grant 4.0% 5.9%

Restricted Stock - Restricted stock issued under the EIP consists of time-based and performance-contingent restricted stock.

Time-based restricted stock - Pursuant to APB 25, compensation expense for shares of time-based restricted stock was measured at the date ofthe award based on the fixed number of shares awarded and the market price of the shares at the award date and is recognized ratably over therestriction period which varies for each issuance of restricted stock and currently ranges from two to five years. Unvested shares of time-basedrestricted stock generally become vested upon retirement, except for certain shares that were awarded for retention purposes that are forfeitedupon retirement.

Performance-contingent restricted stock - Pursuant to APB 25, compensation expense for shares of performance-contingent restricted stockwas measured based on an assessment of probability and timing of achieving performance targets (specified EPS growth) and the market priceof the shares at the reporting date. If performance targets are not met within the performance period, which currently ranges from two to fouryears, these restricted stock grants are forfeited. Unvested shares of performance-contingent restricted stock are prorated at retirement basedon time worked during the performance period and vest only if and when the performance criteria are met.

Participants� unvested time-based and performance-contingent restricted stock is forfeited when the participant voluntarily leaves AlliantEnergy for reasons other than retirement. Compensation expense for time-based and performance-contingent

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restricted stock was $2.2 million, $0.6 million and $0 in 2005, 2004 and 2003, respectively. A summary of the restricted stock activity is asfollows:

2005 2004 2003Unvested shares at beginning of year 77,285 1,745 1,745Granted * 179,405 81,153 --Vested (13,943) (5,613) --Forfeited (5,634) -- --

Unvested shares at end of year 237,113 77,285 1,745

* The weighted-average market price of restricted stock shares granted in 2005 and 2004 was $28.09 and $25.56,respectively.

Performance Shares - Performance share payouts to key employees of Corporate Services and Resources are contingent upon achievement ofspecified goals over three-year periods, with metrics of total shareowner return relative to an investor-owned utility peer group and/orspecified EPS growth, depending on the year of grant. Unvested performance share payouts are prorated at retirement based on time workedduring the performance period and results of the performance criteria. Participants� unvested performance share payouts are forfeited whenthe participant voluntarily leaves Alliant Energy for reasons other than retirement. Performance shares are paid out in shares of AlliantEnergy�s common stock, cash, or a combination of cash and stock and are modified by a performance multiplier, which ranges from zero totwo, based on the performance criteria. Performance shares have an intrinsic value equal to the quoted market price of a share on the date ofpayout. Pursuant to APB 25, Alliant Energy accrues the expenses related to performance shares over the three-year period the services areperformed and recognized expense of $0.8 million, $3.0 million and $4.1 million in 2005, 2004 and 2003, respectively.

(7) COMMON AND PREFERRED STOCK(a) Common Stock - A summary of Alliant Energy�s common stock issuances is as follows:

2005 2004 2003Beginning balance 115,741,816 110,962,910 92,304,220

Equity incentive plans 584,322 256,128 --Shareowner Direct Plan 568,657 646,366 970,445401(k) Savings Plan 140,998 232,427 438,245Public offering -- 3,643,985 17,250,000



Ending balance 117,035,793 115,741,816 110,962,910

In 2004, Alliant Energy entered into a sales agreement with Cantor Fitzgerald & Co., under which Alliant Energy may sell from time to timeup to 7.5 million shares of its common stock. Under this sales agreement, Alliant Energy issued 3.6 million shares of new common stock in2004 and received $90 million in net proceeds. The proceeds were used for capital contributions to IPL and other general corporate purposes.In 2003, Alliant Energy completed a public offering of its common stock generating net proceeds of $318 million, which were used to makecapital contributions to WPL of $200 million and IPL of $118 million in support of their respective generation and reliability initiatives. AtDec. 31, 2005, Alliant Energy had a total of 10.7 million shares available for issuance in the aggregate, pursuant to its Shareowner Direct Plan,Cantor Fitzgerald sales agreement, 401(k) Savings Plan and EIP.

Alliant Energy has a Shareowner Rights Plan whereby rights will be exercisable only if a person or group acquires, or announces a tenderoffer to acquire, 15% or more of Alliant Energy�s common stock. Each right will initially entitle shareowners to buy one-half of one share ofAlliant Energy�s common stock. The rights will only be exercisable in multiples of two at an initial price of $95.00 per full share, subject toadjustment. If any shareowner acquires 15% or more of the outstanding common stock of Alliant Energy, each right (subject to limitations)will entitle its holder to purchase, at the right�s then current exercise price, a number of common shares of Alliant Energy or of the acquirerhaving a market value at the time of twice the right�s per full share exercise price. The Board of Directors is also authorized to reduce the 15%ownership threshold to not less than 10%.

Alliant Energy is a holding company with no significant operations of its own therefore Alliant Energy is dependent upon receiving dividendsfrom its subsidiaries to pay dividends to its shareowners. IPL and WPL each have dividend payment restrictions based on their respectivebond indentures, the terms of their outstanding preferred stock and state regulatory limitations applicable to them. In its July 2005 rate order,the PSCW stated WPL may not pay annual common stock dividends, including pass-through of subsidiary dividends, in excess of $92 millionto Alliant Energy if WPL�s actual average common equity ratio, on a financial basis, is or will fall below the test year authorized level of53.14%. WPL�s dividends are also restricted to the extent that such dividend would reduce the common stock equity ratio to less than 25%. Inaccordance with the IUB order authorizing the IPL merger, IPL must inform the IUB

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if its common equity ratio falls below 42% of total capitalization. At Dec. 31, 2005, IPL and WPL were in compliance with all such dividendrestrictions.

(b) Preferred Stock - The fair value of Alliant Energy�s cumulative preferred stock of subsidiaries, based upon the market yield of similarsecurities and quoted market prices, at Dec. 31, 2005 and 2004 was $295 million ($241 million at IPL and $54 million at WPL) and $303million ($248 million at IPL and $55 million at WPL), respectively. Information related to the carrying value of Alliant Energy�s cumulativepreferred stock of subsidiaries, net (none are mandatorily redeemable) at Dec. 31 was as follows (in millions):

Liquidation Preference/ Authorized SharesStated Value Shares Outstanding Series Redemption 2005 2004

$25 * 6,000,000 8.375% On or after March 15, 2013 $150.0 $150.0$25 * 1,600,000 7.10% On or after Sep. 15, 2008 40.0 40.0

$100 ** 449,765 4.40% - 6.20% Any time 45.0 45.0$25 ** 599,460 6.50% Any time 15.0 15.0

250.0 250.0Less: discount (6.2) (6.2)

$243.8 $243.8

* IPL has 16,000,000 authorized shares in total. ** WPL has 3,750,000 authorized shares in total.

(8) DEBT(a) Short-Term Debt - To provide short-term borrowing flexibility and security for commercial paper outstanding, Alliant Energy and itssubsidiaries maintain committed bank lines of credit, all of which require a fee. At Dec. 31, 2005, Alliant Energy�s short-term borrowingarrangements included three revolving credit facilities totaling $650 million ($100 million for Alliant Energy at the parent company level,



$300 million for IPL and $250 million for WPL) which expire in August 2010. Information regarding commercial paper and other short-termdebt issued under these facilities was as follows (dollars in millions):


At Dec. 31:Commercial paper outstanding $263.0 $83.0 $169.5 $36.0 $93.5 $47.0Average discount rates - commercial paper 4.4% 2.3% 4.4% 2.3% 4.4% 2.3%

For the year ended:Average amount of total short-term debt

(based on daily outstanding balances) $47.9 $71.6 $29.5 $58.8 $18.4 $12.8Average interest rates - total short-term debt 3.5% 1.3% 3.5% 1.3% 3.4% 1.4%

(b) Long-Term Debt - Substantially all of IPL�s utility plant is pledged as collateral under one or more of several outstanding indentures.These indentures secure IPL�s Collateral Trust and First Mortgage Bonds ($190 million of such bonds were outstanding at Dec. 31, 2005).WPL�s First Mortgage Bonds are secured by substantially all of its utility plant ($39 million of such bonds were outstanding at Dec. 31,2005). The non-recourse redeemable preference shares issued by Alliant Energy New Zealand Ltd. (AENZ), Resources� wholly-owned NewZealand subsidiary, are secured by its investments in TrustPower Ltd. (TrustPower) and Infratil Ltd. The borrowings supported by the creditfacility of Alliant Energy Neenah, LLC , Resources� wholly-owned subsidiary, are secured by its Neenah generating facility and relatedassets. The senior secured notes issued by Sheboygan Power, LLC, Resources� wholly-owned subsidiary, are secured by SFEF and relatedassets. IPL, WPL and Resources also maintain indentures related to the issuance of unsecured debt securities.

Alliant Energy has certain issuances of long-term debt that contain optional redemption provisions which, if elected by Alliant Energy, couldrequire material redemption premium payments by Alliant Energy. The redemption premium payments under these optional redemptionprovisions are variable and dependent on applicable treasury rates at the time of redemption. At Dec. 31, 2005, the debt issuances thatcontained these optional redemption provisions included Resources� senior notes due 2011 through 2013, IPL�s senior debentures due 2011through 2034, WPL�s debentures due 2034, Corporate Services� senior notes due 2008 and Sheboygan Power, LLC�s senior secured notesdue 2006 to 2024.

Alliant Energy also has certain issuances of long-term debt on its Consolidated Balance Sheets that contain covenants that require all of thefollowing: i) Alliant Energy�s consolidated net worth to be at least $1.2 billion, ii) Alliant Energy�s consolidated debt-to-capital ratio to be nomore than 70%, and iii) Alliant Energy�s consolidated interest coverage ratio to be

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at least 2.0x. At Dec. 31, 2005, the debt issuances that contained these covenants included Resources� senior notes due 2013 and CorporateServices� senior notes due 2008.

In 2005, 2004 and 2003, Resources and Alliant Energy completed the following debt retirements, and incurred pre-tax debt repaymentpremiums and charges for unamortized debt expenses related to these debt retirements that are recorded in �Loss on early extinguishment ofdebt� in Alliant Energy�s Consolidated Statements of Income, as follows (dollars in millions):

Loss on EarlyDebt Issuance Principal Retired Extinguishment of Debt

2005 2004 2003 2005 2004 2003Resources� 7.375% senior notes due 2009 $204.0 $7.0 $39.0 $29.8 $1.2 $6.8Resources� 7% senior notes due 2011 175.0 24.5 17.5 24.6 4.0 2.9Resources� 9.75% senior notes due 2013 -- 10.0 15.0 -- 3.7 5.6Alliant Energy�s 8.59% senior notes -- -- 24.0 -- -- 1.6

$379.0 $41.5 $95.5 $54.4 $8.9 $16.9



In January 2006, Resources retired the remaining $83 million of its 7% senior notes due 2011 and incurred $11 million of pre-tax loss on earlyextinguishment of debt in the first quarter of 2006. This debt was reported in �Current liabilities - current maturities� on Alliant Energy�sConsolidated Balance Sheet at Dec. 31, 2005. In the first quarter of 2006, Resources also announced it will retire the remaining $275 millionof its 9.75% senior notes due 2013 in March 2006.

In August 2005, AENZ issued NZ$140 million of redeemable preference shares due 2008. Holders of the redeemable preference shares willreceive semi-annual cash dividends of approximately NZ$4.8 million. The approximate US$97 million of proceeds from this transaction wereremitted to Resources and were used for general corporate purposes, including debt reduction. Given their characteristics, AENZ�sredeemable preference shares are reported as �Long-term debt, net (excluding current portion)� on Alliant Energy�s Consolidated BalanceSheet and accrued dividends are reported as �Interest expense� on Alliant Energy�s Consolidated Statements of Income.

In July 2005, WPL repaid at maturity its $72 million, 7.6% first mortgage bonds with the issuance of short-term debt which was later reducedwith the proceeds from the sale of its interest in Kewaunee. In July 2005, IPL issued $50 million of 5.50% senior debentures due 2025 andused the proceeds in August 2005 to retire its $50 million, 7% collateral trust bonds due 2023.

In June 2005, Sheboygan Power, LLC issued $70 million of 5.06% non-recourse senior notes due 2006 to 2024. The proceeds were used inAugust 2005 to assist with the retirement of Resources� remaining $104 million of 7.375% senior notes due 2009.

At Dec. 31, 2005, Alliant Energy�s debt maturities for 2006 to 2010 were $152 million, $263 million, $292 million, $147 million and $114million, respectively. Depending upon market conditions, it is currently anticipated that a majority of the maturing debt will be refinancedwith the issuance of long-term securities and/or retired utilizing the proceeds from asset divestitures. Alliant Energy has fully andunconditionally guaranteed the payment of principal and interest on the senior notes and exchangeable senior notes issued by Resources (onlythe $403 million of exchangeable senior notes will remain outstanding after the first quarter of 2006). No Alliant Energy subsidiaries areguarantors of Resources� debt securities. Alliant Energy does not have any intercompany debt cross-collateralizations or intercompany debtguarantees. At Dec. 31, 2005, there were no significant sinking fund requirements related to the long-term term debt on Alliant Energy�sConsolidated Balance Sheets.

The carrying value of Alliant Energy�s long-term debt (excludes unamortized debt discount) at Dec. 31, 2005 and 2004 was $2.1 billion and$2.4 billion, respectively. The fair value, based upon the market yield of similar securities and quoted market prices, at Dec. 31, 2005 and2004 was $2.5 billion and $3.0 billion, respectively. Amortization/(accretion) related to the discount on long-term debt was $2.0 million, $1.1million and ($1.2) million in 2005, 2004 and 2003, respectively. Alliant Energy�s unamortized debt issuance costs recorded in �Deferredcharges and other� on the Consolidated Balance Sheets were $18 million and $22 million at Dec. 31, 2005 and 2004, respectively.

At Dec. 31, 2005, the carrying amount of the debt component of Resources� 2.5% exchangeable senior notes was $38 million, consisting ofthe par value of $403 million, less unamortized debt discount of $365 million. Resources accounted for the net proceeds from the issuance ofthe notes as two separate components, a debt component and an embedded derivative component. In accordance with SFAS 133, �Accountingfor Derivative Instruments and Hedging Activities� (SFAS 133), Alliant Energy determined the initial carrying value of the debt componentby subtracting the fair value of the derivative component from the net proceeds realized from the issuance of the exchangeable senior notes.This resulted in a very low

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initial carrying amount of the debt component and interest expense at an effective rate of 26.8% of the carrying amount of the debt component.For 2005, interest expense on the notes was $10 million. Interest expense in excess of interest payments is recorded as an increase to thecarrying amount of the debt component and will result in gradual increases to the carrying amount until it reaches the par value of $403million in 2030. Interest expense on the debt component of the notes will be $10 million in 2006, 2007 and 2008, but this will increase overthe term of the debt instrument culminating with interest expense of approximately $95 million in the 12 months prior to maturity in February2030. The derivative component of these notes no longer exists as a result of McLeodUSA, Inc.�s bankruptcy in 2005 as the exchangeablesenior notes included a repayment feature based on the value of McLeodUSA, Inc. common stock.



(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTSThe carrying amount of Alliant Energy�s current assets and current liabilities approximates fair value because of the short maturity of suchfinancial instruments. Since IPL and WPL are subject to regulation, any gains or losses related to the difference between the carrying amountand the fair value of their financial instruments may not be realized by Alliant Energy. Information relating to various investments held byAlliant Energy at Dec. 31 that are marked-to-market as a result of SFAS 115, �Accounting for Certain Investments in Debt and EquitySecurities,� (SFAS 115) was as follows (in millions):

2005 2004Unrealized Unrealized

Carrying/Fair

Gains, Netof

Carrying/Fair

Gains, Netof

Value Tax Value TaxAvailable-for-sale securities:

Nuclear decommissioning trust funds - WPL:Equity securities $-- $-- $51.2 $13.0Debt securities -- -- 21.0 0.7

Various other investments (1) 35.9 12.8 30.8 11.9Trading securities 1.7 N/A 0.7 N/A

(1) Realized pre-tax gains from sales were $0, $3.6 million and $2.3 million in 2005, 2004 and 2003, respectively (cost of the investmentsbased on specific identification was $0.1 million, $1.7 million and $5.3 million and pre-tax proceeds from the sales were $0.1 million,$5.3 million and $7.6 million, respectively).

Nuclear Decommissioning Trust Funds - The information in the above table and this paragraph relate to the non-qualified portion of WPL�snuclear decommissioning trust funds. The qualified portion of WPL�s nuclear decommissioning trust funds as well as IPL�s nucleardecommissioning trust funds were included in the respective sales agreements of Kewaunee and DAEC and as a result are reported as assetsheld for sale. The fair value of WPL�s nuclear decommissioning trust funds, as reported by the trustee, was adjusted for the tax effect ofunrealized gains and losses. Net unrealized holding gains were recorded as part of regulatory liabilities or as an offset to regulatory assetsrelated to AROs. The funds realized pre-tax gains (losses) from the sales of securities of $23 million, ($3) million and ($4) million in 2005,2004 and 2003, respectively (cost of the investments based on specific identification was $110 million, $14 million and $29 million and pre-tax proceeds from the sales were $133 million, $11 million and $25 million, respectively).

Refer to Notes 7(b), 8(b) and 10(a) for information regarding the fair values of preferred stock, long-term debt and derivatives, respectively.

Investments in Foreign Entities - The geographic concentration of Alliant Energy�s unconsolidated foreign investments at Dec. 31 was asfollows (in millions):

Brazil New Zealand TotalDec. 31, 2005 $72.2 $116.4 $188.6Dec. 31, 2004 326.4 115.9 442.3

Brazil - As of Dec. 31, 2005 and 2004, Resources held a non-controlling interest in five Brazilian electric utility companies and a natural gas-fired generating facility through several direct investments accounted for under the equity method of accounting. In January 2006, AlliantEnergy accepted an offer from a Brazil-based investor and completed the sale of all of its Brazil investments for a sales price of $152 million.In accordance with APB 18, �The Equity Method of Accounting for Investments in Common Stock� (APB 18), and EITF Issue 01-5,�Application of FASB Statement No. 52 to an Investment Being Evaluated for Impairment That Will Be Disposed Of� (EITF 01-5), AlliantEnergy recorded pre-tax, non-cash asset valuation charges related to its Brazilian investments of $334 million (after-tax charges of $202million, or $1.73 per share) in its 2005 earnings from continuing operations. Such charges are included in �Asset valuation charges - Brazilinvestments� on Alliant Energy�s Consolidated Statements of Income.

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In accordance with APB 18, Alliant Energy recorded pre-tax, non-cash valuation charges of $242 million ($96 million in the second quarter,$40 million in the third quarter and $106 million in the fourth quarter) during 2005 as a result of declines in the fair value of these Brazilinvestments that were determined to be other than temporary. These charges reduced the local currency carrying amount of Alliant Energy�sinvestments in Brazil to their estimated local currency fair value. Alliant Energy estimated the fair value of its Brazil investments at the end ofthe first three quarters of 2005 by using a combination of market value indicators and the expected discounted future U.S. dollar cash flowsconverted to local currencies at the foreign currency exchange rate at the end of each respective quarter. The non-cash valuation chargesrecorded in the second and third quarters of 2005 resulted primarily from the impact of significant changes in the spread between the foreigncurrency exchange rate at the end of the quarter and both past and projected future rates; consideration of updated market and otherinformation Alliant Energy received from its financial advisor and its Brazilian partners in 2005; and an assessment of potential outcomes ofthe various strategic alternatives being evaluated by Alliant Energy. The pre-tax, non-cash valuation charge of $106 million recorded in thefourth quarter of 2005 was based on the terms of the sale agreement.

In accordance with EITF 01-5, Alliant Energy also recorded an additional pre-tax, non-cash valuation charge in the fourth quarter of 2005 of$92 million related to the pre-tax cumulative foreign currency translation losses associated with its Brazil investments (after-tax amount of$61 million is recorded in �Accumulated other comprehensive loss� on Alliant Energy�s Consolidated Balance Sheet at Dec. 31, 2005). Thisadditional pre-tax, non-cash valuation charge reduced the carrying value of Alliant Energy�s Brazil investments at Dec. 31, 2005 to $72million which equals the $152 million sales price plus a $12 million non-refundable deposit received by Alliant Energy as a result of anarbitration dispute less the $92 million cumulative foreign currency translation loss. The $12 million non-refundable deposit was recorded in�Current liabilities - other� on Alliant Energy�s Consolidated Balance Sheet as of Dec. 31, 2005 and was not assigned to the buyer as part ofthe sale agreement.

In accordance with SFAS 52, �Foreign Currency Translation,� Alliant Energy will remove the pre-tax foreign currency translation lossesassociated with its Brazil investments from �Accumulated other comprehensive loss� on Alliant Energy�s Consolidated Balance Sheet in thefirst quarter of 2006. These losses will substantially offset the pre-tax gain recorded in the first quarter of 2006 resulting from the differencebetween the $152 million purchase price plus $12 million non-refundable deposit, and the carrying value of Alliant Energy�s Brazilinvestments at the date of the sale. As a result, the impact on earnings from these transactions in the first quarter of 2006 will not besignificant.

New Zealand - Resources� investments include a 23.8% ownership interest in TrustPower, a hydro and wind generation utility company, anda 5.0% ownership interest in Infratil Ltd., an infrastructure development company. Based on the exchange rates and trading prices at Dec. 31,2005 and Dec. 31, 2004, the TrustPower investment fair value was $314 million and $306 million, and the carrying value was $88 million and$89 million, respectively. The Infratil Ltd. investment is marked-to-market at each balance sheet date in accordance with SFAS 115. At Dec.31, 2005, Alliant Energy had recorded an after-tax unrealized gain of $10 million in �Accumulated other comprehensive loss� on itsConsolidated Balance Sheet related to its investment in Infratil Ltd.

Unconsolidated Equity Investments - Alliant Energy�s unconsolidated investments accounted for under the equity method of accounting areas follows (dollars in millions):

Ownership Carrying ValueInterest at at Dec. 31, Equity (Income) / Loss

Dec. 31, 2005 2005 2004 2005 2004 2003ATC 21% $152 $141 ($21) ($19) ($16)TrustPower 24% 88 89 (14) (11) (8)Brazil Various 72 326 (36) (17) (9)Wisconsin River Power Company 50% 10 13 (5) (6) (5)Kaufman and Broad NexGen LLC (1) -- -

-8 18 19 20

Nuclear Management Co., LLC (NMC) (2) 25% 4 3 -- -- --Other Various 3 6 (2) -- --

$329 $586 ($60) ($34) ($18)

(1) Investment in a synthetic fuel processing facility that was sold in the fourth quarter of 2005. The synthetic fuel project generatedequity losses which were more than offset by tax credits and the tax benefit of the losses generated.



(2) As a result of the sale of DAEC in January 2006, Alliant Energy no longer owns an interest in NMC.

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Summary financial information from the financial statements of these investments is as follows (in millions):

2005 2004 2003Operating revenues $2,106 $1,936

$1,776

Operating income 399 295 215Net income 121 45 16

As of Dec. 31:Current assets 572 451Non-current assets 3,517 2,764Current liabilities 744 747Non-current liabilities 1,602 1,209Minority interest 257 203

Refer to Note 21 for information regarding related party transactions with ATC and NMC.

Other Investments - In addition to the investments discussed above in this Note, and the cash surrender value of life insurance policiesdiscussed in Note 6(a), Alliant Energy also had $24 million and $40 million of cost method investments at Dec. 31, 2005 and 2004,respectively that were not accounted for in accordance with SFAS 115. The carrying amount of these investments approximates their fairvalue.

(10) DERIVATIVE FINANCIAL INSTRUMENTS(a) Accounting for Derivative Instruments and Hedging Activities - Alliant Energy records derivative instruments at fair value on thebalance sheet as assets or liabilities and changes in the derivatives� fair values for non-regulated entities in earnings unless specific hedgeaccounting criteria are met. For IPL and WPL, changes in the derivatives� fair values are generally recorded as regulatory assets or liabilities.At Dec. 31, current derivative assets were included in �Other current assets,� non-current derivative assets were included in �Deferred chargesand other,� current derivative liabilities were included in �Other current liabilities� and non-current derivative liabilities were included in�Other long-term liabilities and deferred credits� on the Consolidated Balance Sheets as follows (in millions):


Current derivative assets $20.6 $5.3 $7.8 $0.6 $12.7 $4.7Non-current derivative assets 9.7 -- 4.2 -- 4.4 --Current derivative liabilities 24.2 10.6 5.2 3.9 19.0 6.7Non-current derivative liabilities 3.0 0.3 1.5 -- 1.5 --

Changes in the derivatives� fair values at IPL and WPL during 2005 were primarily due to the impact of significant increases in natural gasprices and additional gas contracts entered into in 2005 to mitigate pricing volatility for IPL�s and WPL�s customers.

Cash Flow Hedging Instruments - Alliant Energy has certain derivative instruments designated as cash flow hedging instruments includingtreasury rate locks used by Resources to mitigate risk associated with movements in the 10-year treasury yield prior to the planned issuance ofits 7% senior notes. In addition, interest rate swaps were used to mitigate risk from changes in interest rates associated with the variable ratelong-term debt used to finance Resources� Neenah generating facility.



In 2005 and 2004, no amounts were recognized relating to the amount of hedge ineffectiveness in accordance with SFAS 133. In 2005 and2004, Alliant Energy did not exclude any components of the derivative instruments� gain or loss from the assessment of hedge effectivenessand Alliant Energy reclassified net losses of $0.8 million and $0.1 million, respectively, into earnings as a result of the discontinuance ofhedges. Alliant Energy estimates that an insignificant amount will be reclassified from accumulated other comprehensive loss into earnings in2006 as the hedged transactions affect earnings.

Other Derivatives Not Designated in Hedge Relationships - Alliant Energy�s other derivatives not designated in hedge relationships during2005 and/or 2004 included electric, coal and gas contracts entered into by IPL and WPL. Electric contracts were used to manage utility energycosts during supply/demand imbalances. Coal and gas contracts that do not qualify for the normal purchase and sale exception were used tomanage the price of anticipated purchases and sales.

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(b) Weather Derivatives - Alliant Energy uses weather derivatives to reduce the impact of weather volatility on its utility electric and naturalgas sales volumes. Alliant Energy�s ratepayers do not pay any of the premiums nor do they share in the gains/losses realized from theseweather derivatives.

In 2005, IPL and WPL each entered into separate non-exchange traded electric weather derivative agreements based on cooling degree days toreduce the impact of weather volatility on their respective electric margins for the period June 1, 2005 to Aug. 31, 2005. The actual coolingdegree days during this period were higher than those specified in the contracts resulting in IPL and WPL paying the counterparty themaximum amount under the agreements of $5.5 million and $3.5 million, respectively, in 2005.

In 2005, Corporate Services, as agent for IPL and WPL, and WPL on behalf of itself entered into a combination of put options and swapagreements based on heating degree days (HDD) to reduce the impact of weather volatility on IPL�s and WPL�s margins for the period Nov.1, 2005 to March 31, 2006. Alliant Energy will receive up to a maximum of $9 million ($4.7 million for IPL and $4.3 million for WPL) ofpayments from the counterparty if actual HDD are less than the HDD specified in the contract (for the put options and swaps) or remit up to amaximum of $4.5 million ($2.3 million for IPL and $2.2 million for WPL) of funds to the counterparty if actual HDD are greater than theHDD specified in the contract (swaps only). In 2004 and 2003, Corporate Services, as agent for IPL and WPL, entered into non-exchangetraded options based on HDD in which Corporate Services had the right to receive payment from the counterparty if actual HDD were lessthan the HDD specified in the contract.

Any premiums paid related to the electric and gas weather derivative agreements are expensed over each respective contract period. AlliantEnergy uses the intrinsic value method to account for these weather derivatives. Information relating to the electric and gas weatherderivatives was as follows (in millions):


Premiums expensed $2.0 $1.7 $1.6 $0.9 $0.7 $0.7 $1.1 $1.0 $0.9Premiums paid 1.1 1.9 1.5 0.6 0.7 0.6 0.5 1.2 0.9Gains (losses) (10.9) (0.2) 1.4 (6.4) (0.2) 0.6 (4.5) -- 0.8Amounts paid to counterparties (8.4) -- -- (5.3) -- -- (3.1) -- --

(c) Energy-trading Contracts - Alliant Energy adopted EITF 02-3 on Jan. 1, 2003 for all of NG Energy Trading, LLC�s (classified as adiscontinued operation and sold in 2004) trading contracts and storage gas acquired prior to Oct. 25, 2002. The impact of transitioning fromreporting inventory and existing contracts that were not derivatives under SFAS 133 at fair value to historical cost resulted in a cumulativeeffect charge of $2.1 million in the first quarter of 2003.

(11) COMMITMENTS AND CONTINGENCIES(a) Construction and Acquisition Expenditures - Alliant Energy has made certain commitments in connection with its 2006 capitalexpenditures.



(b) Purchase Obligations - Alliant Energy, through its subsidiaries Corporate Services, IPL and WPL, has entered into purchased power, coaland natural gas supply, transportation and storage contracts. Certain purchased power contracts are considered operating leases and aretherefore not included here, but are included in Note 3(a). The natural gas supply and purchased power contracts are either fixed price innature or market-based. Most of the coal supply contracts are fixed price, however some of the recent contracts are index-based. Nearly all ofthe coal transportation contracts are index-based. Alliant Energy expects to supplement its coal and natural gas supplies with spot marketpurchases as needed. The table includes commitments for �take-or-pay� contracts which result in dollar commitments with no associated tonsor dekatherms (Dths). At Dec. 31, 2005, Alliant Energy�s minimum commitments related to its utility business were as follows (dollars andDths in millions; MWhs and tons in thousands):

Purchased Power Coal Natural GasDollars MWhs Dollars Tons Dollars Dths

2006 $301.1 5,051 $104.9 11,408 $352.7 31

2007 147.1 3,285 81.3 8,506 45.3 --2008 75.8 1,830 51.2 5,290 21.0 --

2009 87.5 1,771 34.1 2,822 15.6 --

2010 86.3 1,763 18.4 738 11.3 --Thereafter 225.0 5,796 47.3 -- 10.7 --

$922.8 19,496 $337.2 28,764 $456.6 31

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Also, at Dec. 31, 2005, Alliant Energy�s other purchase obligations, which represent individual commitments incurred during the normalcourse of business which exceeded $1.0 million at Dec. 31, 2005, were $17 million for 2006 and $1 million for each of 2007 and 2008. Thisexcludes lease obligations which are included in Note 3. Refer to Note 18 for details on a long-term purchased power agreement entered intoupon IPL�s sale of its interest in DAEC in January 2006, the amounts of which are not reflected in the above table. The amounts related toWPL�s Kewaunee purchased power agreement are included in the above table.

(c) Legal Proceedings - Alliant Energy is involved in legal and administrative proceedings before various courts and agencies with respect tomatters arising in the ordinary course of business. Although unable to predict the outcome of these matters, Alliant Energy believes thatappropriate reserves have been established and final disposition of these actions will not have a material adverse effect on its financialcondition or results of operations.

(d) Guarantees and Indemnifications - Alliant Energy provided indemnifications associated with various sales of its non-regulated andutility businesses/assets for losses resulting from potential breach of the representations and warranties made by Alliant Energy on the saledates and for the breach of its obligations under the sale agreements. Alliant Energy believes the likelihood of having to make any materialcash payments under these indemnifications is remote. In accordance with the provisions of FIN 45, �Guarantor�s Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others,� the terms of the indemnifications provided by AlliantEnergy at Dec. 31, 2005 for the various sales were as follows (in millions):

Businesses/Assets Sold Disposal Date Maximum Limit Expiration DateAustralian Second quarter of 2003 $62 (a) October 2007Energy services Second quarter of 2005 18 October 2006Kewaunee Third quarter of 2005 12 (b) July 2006Oil pipeline system Fourth quarter of 2005 None identified None identifiedSynfuel Fourth quarter of 2005 5 (c) None identified



Other Various 3 Various(a) Based on exchange rates at Dec. 31, 2005(b) Indemnification provided by WPL(c) Amount will increase in future periods based on additional tax credits earned by buyer

Alliant Energy also continues to guarantee the abandonment obligations of WPC under the Point Arguello partnership agreements. As of Dec.31, 2005, the guarantee does not include a maximum limit, but is currently estimated at approximately $6 million, which is the present valueof the abandonment liability. Alliant Energy believes that no payments will be made under this guarantee.

Alliant Energy has not recorded any material liabilities related to the above indemnifications as of Dec. 31, 2005. Refer to Note 17 forinformation regarding an additional indemnity issued by WPL related to its sale of Kewaunee. Alliant Energy made a $4.1 million payment inJune 2005 under its guarantee outstanding to support a third-party financing arrangement related to its biomass facility. Refer to Note 3(a) fordiscussion of Alliant Energy�s residual value guarantees of its synthetic leases.

(e) Environmental Liabilities - Alliant Energy, IPL and WPL had recorded the following environmental liabilities at Dec. 31 (in millions;MGP=Manufactured Gas Plants):


MGP sites $42.4$40.7

$36.7 $35.5 $5.7 $5.2

Other 1.9 3.4 1.1 2.1 0.7 1.3$44.3 $44.1 $37.8 $37.6 $6.4 $6.5

MGP Sites - IPL and WPL have current or previous ownership interests in 43 and 14 sites, respectively, previously associated with theproduction of gas for which they may be liable for investigation, remediation and monitoring costs relating to the sites. IPL and WPL havereceived letters from state environmental agencies requiring no further action at six sites each. Additionally, IPL has met state environmentalagency expectations at five additional sites requiring no further action for soil remediation. IPL and WPL are working pursuant to therequirements of various federal and state agencies to investigate, mitigate, prevent and remediate, where necessary, the environmental impactsto property, including natural resources, at and around the sites in order to protect public health and the environment.

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IPL and WPL record environmental liabilities based upon periodic studies, most recently updated in the third quarter of 2005, related to theMGP sites. Such amounts are based on the best current estimate of the remaining amount to be incurred for investigation, remediation andmonitoring costs for those sites where the investigation process has been or is substantially completed, and the minimum of the estimated costrange for those sites where the investigation is in its earlier stages. It is possible that future cost estimates will be greater than current estimatesas the investigation process proceeds and as additional facts become known. The amounts recognized as liabilities are reduced forexpenditures made and are adjusted as further information develops or circumstances change. Costs of future expenditures for environmentalremediation obligations are not discounted to their fair value. Management currently estimates the range of remaining costs to be incurred forthe investigation, remediation and monitoring of Alliant Energy�s sites to be $34 million ($29 million for IPL and $5 million for WPL) to $57million ($50 million for IPL and $7 million for WPL).

Under the current rate making treatment approved by the PSCW, the MGP expenditures of WPL, net of any insurance proceeds, are deferredand collected from gas customers over a five-year period after new rates are implemented. The Minnesota Public Utilities Commission alsoallows the deferral of MGP-related costs applicable to the Minnesota sites and IPL has been successful in obtaining approval to recover suchcosts in rates in Minnesota. The IUB has permitted utilities to recover prudently incurred costs by allowing a representative level of MGPcosts in rate cases. Regulatory assets have been recorded by IPL and WPL, which reflect the probable future rate recovery, where applicable.Considering the current rate treatment, and assuming no material change therein, IPL and WPL believe that the clean-up costs incurred for



these MGP sites will not have a material adverse effect on their respective financial condition or results of operations. Settlement has beenreached with all of IPL�s and WPL�s insurance carriers regarding reimbursement for their MGP-related costs.

Clean Air Interstate Rule (CAIR) and Clean Air Mercury Rule (CAMR) - In March 2005, the EPA finalized CAIR and CAMR, whichboth require emission control upgrades to existing electric generating units with greater than 25 MW capacity. CAIR will cap emissions ofSO2 and nitrogen oxides (NOx) in 28 states (including Iowa and Wisconsin) in the eastern U.S. and, when fully implemented, reduce SO2 andNOx emissions in these states by over 70% and 60% from 2003 levels, respectively. CAMR will reduce U.S. utility (including IPL and WPL)mercury emissions by approximately 70% when fully implemented. Alliant Energy believes that future capital investments and/ormodifications to comply with these rules will be significant.

(f) Credit Risk - IPL and WPL serve a diversified base of residential, commercial, industrial and wholesale customers and did not have anysignificant concentrations of credit risk. In addition, Alliant Energy and its subsidiaries have limited credit exposure from non-performance ofcontractual obligations by its counterparties. Alliant Energy maintains credit risk oversight and sets limits and policies with regards to itscounterparties, which management believes minimizes its overall credit risk exposure. However, there is no assurance that such policies willprotect Alliant Energy against all losses from non-performance by counterparties. Refer to Note 20 for discussion of the credit risk related toCalpine�s recent bankruptcy.

(12) JOINTLY-OWNED ELECTRIC UTILITY PLANTUnder joint ownership agreements with other Iowa and Wisconsin utilities, IPL and WPL have undivided ownership interests in jointly-ownedelectric generating stations. IPL also has joint ownership agreements related to transmission facilities. Each of the respective owners isresponsible for the financing of its portion of the construction costs. Kilowatt-hour generation and operating expenses are divided on the samebasis as ownership with each owner reflecting its respective costs in its Consolidated Statements of Income. Information relative to IPL�s andWPL�s ownership interest in these facilities at Dec. 31, 2005 was as follows (dollars in millions):

Cost ofRemoval

ObligationsAccumulated Construction Included in

Fuel Ownership Plant in Provision for Work in RegulatoryType Interest % Service Depreciation Progress Liabilities

IPL

Ottumwa Coal 48.0$203.1 $99.7 $1.8 $13.7

Neal Unit 4 Coal 25.7 93.0 54.0 3.5 9.4Neal Unit 3 Coal 28.0 73.2 37.1 -- 4.1Louisa Unit 1 Coal 4.0 26.8 16.2 0.3 2.5

396.1 207.0 5.6 29.7WPL

Edgewater Unit 5 Coal 75.0 239.5 128.9 2.7 6.1Columbia Energy Center Coal 46.2 215.7 115.4 8.4 11.3Edgewater Unit 4 Coal 68.2 74.7 41.0 1.1 4.1

529.9 285.3 12.2 21.5

$926.0 $492.3 $17.8 $51.2

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Refer to Notes 16 and 18 for information regarding assets held for sale related to DAEC at Dec. 31, 2005 and the sale of IPL�s interest inDAEC in January 2006, respectively. Refer to Note 1(c) for further discussion of cost of removal obligations.



(13) SEGMENTS OF BUSINESSAlliant Energy�s principal businesses are:�� Utility business - includes IPL and WPL, serving customers in Iowa, Wisconsin, Minnesota and Illinois. The utility business is broken

down into three segments: a) electric operations; b) gas operations; and c) other, which includes the steam business, various other energy-related products and services and the unallocated portions of the utility business. Various line items in the following tables are notallocated to the electric and gas segments for management reporting purposes and therefore are included in �Total Utility Business.�

�� Non-regulated businesses - represents the operations of Resources and its subsidiaries, and is broken down into two segments: a)International (Int�l) and b) other, which includes the operations of the Non-regulated Generation business platform and other non-regulated investments described in Note 1(a); the operations of Resources (the non-regulated parent company); and any non-regulatedreconciling/eliminating entries.

�� Other - includes the operations of Alliant Energy (the parent company) and Corporate Services, as well as any Alliant Energy parentcompany reconciling/eliminating entries.

Alliant Energy�s administrative support services are directly charged to the applicable segment where practicable. In all other cases,administrative support services are allocated to the applicable segment based on Alliant Energy�s corporate services agreements. In 2005,2004 and 2003, gas revenues included $56 million, $22 million and $48 million, respectively, for sales to the electric segment. All otherintersegment revenues were not material to Alliant Energy�s operations and there was no single customer whose revenues were 10% or moreof Alliant Energy�s consolidated revenues. Certain financial information relating to Alliant Energy�s significant business segments, productsand services and geographic information was as follows (in millions):

Alliant

Utility Business Non-regulated Businesses Energy

Electric Gas Other Total Int�l Other Total Other Consolidated

2005

Operating revenues $2,320.6 $685.1 $85.6 $3,091.3 $-- $195.6 $195.6 ($7.3) $3,279.6

Depreciation and amortization 272.5 26.0 6.3 304.8 1.4 15.3 16.7 (1.2) 320.3

Operating income (loss) 437.6 48.1 (7.1) 478.6 (10.8) 9.1 (1.7) (1.0) 475.9

Interest expense, net of AFUDC 98.1 36.0 41.4 77.4 (9.7) 165.8

Loss on early extinguishment

of debt -- -- 54.4 54.4 -- 54.4

Equity (income) loss from

unconsolidated investments (26.4) (50.7) 17.5 (33.2) -- (59.6)

Asset valuation charges - Brazil

investments -- 334.3 -- 334.3 -- 334.3

Preferred dividends 18.7 -- -- -- -- 18.7

Interest income and other (5.2) (6.8) (32.5) (39.3) 3.3 (41.2)

Income tax expense (benefit) 141.7 (135.5) (62.1) (197.6) 3.0 (52.9)

Income (loss) from continuing

operations 251.7 (188.1) (9.6) (197.7) 2.4 56.4

Loss from discontinued

operations, net of tax -- (45.6) (18.5) (64.1) -- (64.1)

Net income (loss) 251.7 (233.7) (28.1) (261.8) 2.4 (7.7)

Total assets 5,459.4 812.5 375.9 6,647.8 392.5 565.6 958.1 127.2 7,733.1

Investments in equity method

subsidiaries 166.0 -- -- 166.0 159.9 3.2 163.1 -- 329.1

Construction and acquisition

expenditures 409.3 46.4 1.8 457.5 -- 60.3 60.3 9.8 527.6

89



Alliant



2004


Depreciation and amortization 266.9 26.4 6.1 299.4 1.5 15.9 17.4 0.1 316.9

Operating income (loss) 392.3 35.2 (3.4) 424.1 (12.0) 1.1 (10.9) (4.9) 408.3

Interest expense, net of AFUDC 82.9 34.3 40.6 74.9 0.6 158.4


of debt -- -- 8.9 8.9 -- 8.9


unconsolidated investments (24.8) (28.5) 19.1 (9.4) (0.1) (34.3)


Interest income and other (2.4) (1.8) (48.0) (49.8) (0.8) (53.0)

Income tax expense (benefit) 128.3 (12.3) (27.2) (39.5) 2.4 91.2


operations 221.4 (3.7) 7.7 4.0 (7.0) 218.4

Income (loss) from discontinued

operations, net of tax -- 1.5 (74.4) (72.9) -- (72.9)

Net income (loss) 221.4 (2.2) (66.7) (68.9) (7.0) 145.5

Total assets 5,420.7 737.1 370.7 6,528.5 826.3 704.8 1,531.1 215.6 8,275.2


subsidiaries 157.8 -- -- 157.8 415.4 12.8 428.2 -- 586.0


expenditures 493.8 41.4 3.4 538.6 1.8 77.6 79.4 15.4 633.4

Alliant



2003


Depreciation and amortization 238.8 25.7 3.8 268.3 1.4 17.0 18.4 0.1 286.8

Operating income (loss) 363.6 42.4 2.5 408.5 (6.6) (7.4) (14.0) (1.3) 393.2

Interest expense, net of AFUDC 82.6 38.0 58.3 96.3 5.5 184.4


of debt -- -- 15.2 15.2 1.7 16.9


unconsolidated investments (20.9) (16.9) 20.2 3.3 -- (17.6)


Interest income and other (3.5) (4.7) (27.4) (32.1) 0.9 (34.7)

Income tax expense (benefit) 136.2 (12.7) (50.3) (63.0) 2.4 75.6


operations 197.2 (10.3) (23.4) (33.7) (11.8) 151.7


operations, net of tax -- 51.6 (13.8) 37.8 -- 37.8

Cumulative effect of changes in

accounting principles, net of tax -- -- (6.0) (6.0) -- (6.0)

Net income (loss) 197.2 41.3 (43.2) (1.9) (11.8) 183.5

Total assets 5,027.3 673.2 393.4 6,093.9 751.6 841.6 1,593.2 110.4 7,797.5




subsidiaries 137.0 -- -- 137.0 364.3 23.7 388.0 -- 525.0


expenditures 649.5 37.2 3.0 689.7 4.1 221.1 225.2 (99.3) 815.6

Products and Services - In 2005, Alliant Energy�s utility electric and gas revenues represented 71% and 21% of consolidated operatingrevenues, respectively. No other products or services represented more than 10% of Alliant Energy�s consolidated operating revenues in 2005.

Geographic Information - At Dec. 31, 2005, 2004 and 2003, Alliant Energy�s long-lived assets to be held and used in foreign countries werenot material. Refer to Note 9 for a breakdown of Alliant Energy�s international investments by country.

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(14) GOODWILL AND OTHER INTANGIBLE ASSETSGoodwill - Refer to Note 16 for a discussion of goodwill related to Alliant Energy�s China assets that was impaired in 2005. At Dec. 31, 2005and 2004, Alliant Energy had $3 million of goodwill related to its environmental engineering and site remediation business included in�Deferred charges and other� on Alliant Energy�s Consolidated Balance Sheets.

Emission Allowances - Emission allowances are granted by the EPA to sources of pollution that allow the release of a prescribed amount ofpollution each year. At Dec. 31, 2005, IPL had $27 million of SO2 emission allowances recorded as an intangible asset included in �Deferredcharges and other� on Alliant Energy�s and IPL�s Consolidated Balance Sheets. At Dec. 31, 2005, IPL estimates amortization expense for itspurchased emission allowances for 2006 to 2010 will be $1 million, $0, $0, $11 million, and $0, respectively. Amortization expenseassociated with purchased emission allowances will be recorded in �Electric production fuel and purchased power� on Alliant Energy�s andIPL�s Consolidated Statements of Income and will be offset with the amortization of the regulatory liabilities established with the sale ofemission allowances in December 2005 resulting in no impact on their results of operations. Refer to Note 1(c) for further discussion of theregulatory treatment of IPL�s SO2 emission allowances.

(15) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)All �per share� references refer to earnings per diluted share. Summation of the individual quarters may not equal annual totals due torounding. The amounts for the first and second quarters of 2005 and 2004 have been adjusted from the amounts reflected in the 2005 quarterlyreports on Form 10-Q as filed for the respective periods to reflect certain non-regulated businesses as discontinued operations. Refer to Note16 for additional information.

2005 2004

March31

June30

Sep.30

Dec.31

March31

June30

Sep.30

Dec.31

(in millions, except per share data)

Operating revenues $798.8 $699.8 $874.2 $906.8 $769.6 $599.3 $693.6 $742.3

Operating income 87.4 83.2 199.3 106.0 69.2 83.1 166.4 89.6


operations (a) 26.7 (8.7) 99.6 (61.2) 33.4 35.0 92.4 57.6


operations, net of tax (24.3) (50.0) 12.9 (2.7) 0.7 (48.1) (10.6) (14.9)

Net income (loss) (a) 2.4 (58.7) 112.5 (63.9) 34.1 (13.1) 81.8 42.7



EPS:


operations (a) 0.23 (0.07) 0.85 (0.53) 0.30 0.31 0.80 0.50


operations (0.21) (0.43) 0.11 (0.02) 0.01 (0.43) (0.09) (0.13)

Net income (loss) (a) 0.02 (0.50) 0.96 (0.55) 0.31 (0.12) 0.71 0.37

(a) In the second, third and fourth quarters of 2005, Alliant Energy incurred after-tax, non-cash asset valuation charges related to its Brazilianinvestments of $56 million, $23 million and $123 million, or $0.48, $0.20 and $1.05 per share, respectively.

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(16) DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALEAlliant Energy has completed the disposal, or is currently pursuing the disposal, of numerous non-regulated and utility businesses and otherassets in order to strengthen its financial profile and narrow its strategic focus and risk profile. At or before Dec. 31, 2005, the followingbusinesses qualified as assets held for sale as defined by SFAS 144 (IPO=Initial Public Offering):

Business/Asset Disposal Date SegmentNon-regulated businesses:

Australian Second quarter of 2003 Non-regulated - InternationalAffordable housing Third quarter of 2003 Non-regulated - OtherSmartEnergy, Inc. Third quarter of 2003 Non-regulated - OtherIPO of approximately 95% of WPC Fourth quarter of 2003 Non-regulated - OtherGas marketing Third quarter of 2004 Non-regulated - OtherEnergy management services Fourth quarter of 2004 Non-regulated - OtherEnergy services (Cogenex Corp. and affiliates) Second quarter of 2005 Non-regulated - OtherBiomass facility (a) Second quarter of 2005 Non-regulated - OtherOil gathering pipeline system (a) Fourth quarter of 2005 Non-regulated - OtherGas gathering pipeline systems (a) Expected by June 2006 Non-regulated - OtherChina (a) Expected to be completed Non-regulated - International

by June 2006 (b)Mexico (a) Expected by Sep. 2006 Non-regulated - Other

Utility businesses/assets:WPL�s water utility in Ripon, Wisconsin Third quarter of 2005 Utility - OtherWPL�s interest in Kewaunee (a) (Note 17) Third quarter of 2005 Utility - ElectricIPL�s interest in DAEC (a) (Note 18) First quarter of 2006 Utility - ElectricWPL�s water utility in South Beloit, Illinois (a) Expected in 2006 Utility - OtherWPL�s electric and gas utility assets in Illinois (a) Expected in 2006 Utility - Electric and GasIPL�s electric and gas utility assets in Illinois (a) Expected in 2006 Utility - Electric and Gas

(a) Qualified as assets held for sale beginning in 2005.(b) Three of 10 generating facilities were sold in 2005. Three additional generating facilities were sold in February 2006.

SFAS 144 requires that a long-lived asset classified as held for sale be measured at the lower of its carrying amount or fair value, less costs tosell, and to cease depreciation, depletion and amortization (DD&A). Certain assets and liabilities of the businesses/assets listed in the abovetable have been classified as held for sale on Alliant Energy�s Consolidated Balance Sheets at Dec. 31, 2005 and 2004. The operating resultsof the non-regulated businesses listed in the above table have been separately classified and reported as discontinued operations in Alliant



Energy�s Consolidated Statements of Income. The operating results of the utility businesses/assets listed in the above table have not beenreported as discontinued operations.

Prior to the IPO of WPC in 2003, Alliant Energy and WPC entered into a tax separation and indemnification agreement pursuant to whichAlliant Energy and WPC made tax elections with the effect that the tax basis of the assets of WPC�s consolidated tax group were increasedbased on the sales price of WPC�s shares in the IPO. This increase was included in income in the 2003 consolidated federal income tax returnfiled by Alliant Energy. WPC has agreed to pay Resources 90% of any tax benefits realized annually due to the increase in tax basis for yearsending on or prior to Dec. 31, 2013. Such tax benefits will generally be calculated by comparing WPC�s actual taxes to the taxes that wouldhave been owed by WPC had the increase in basis not occurred. In 2014, WPC will be obligated to pay Resources the present value of theremaining tax benefits assuming all such tax benefits will be realized in future years. At the IPO closing date, Resources recorded a receivablefrom WPC based on the estimated present value of the payments expected from WPC. At Dec. 31, 2005 and 2004, the carrying value of thisreceivable was $32 million and $36 million, respectively. The current and non-current portions of this receivable are recorded in �Othercurrent assets� and �Deferred charges and other,� respectively, on Alliant Energy�s Consolidated Balance Sheets.

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A summary of the components of discontinued operations in Alliant Energy�s Consolidated Statements of Income was as follows (inmillions):

2005 2004 2003Operating revenues (a)

$166.2 $295.8 $589.8

Operating expenses: (a)Operating expenses (excluding gains, losses and valuation charges) 165.0 299.1 484.7(Gain) loss on disposal of assets held for sale, net (b) 13.6 (0.3) 18.9Valuation charges - China business (c) 72.1 -- --Valuation charge - gas gathering pipeline systems 1.9 -- --Valuation charges - energy services business (d) -- 79.8 --

Interest expense and other:Interest expense (e) 23.8 30.0 45.6SFAS 133 income - Australian business (f) -- -- (14.7)Interest income and other (0.8) (0.1) (13.3)

Income (loss) before income taxes (109.4) (112.7) 68.6Income tax expense (benefit) (45.3) (39.8) 30.8

Income (loss) from discontinued operations, net of tax ($64.1) ($72.9) $37.8

(a) Operating margins were higher in 2003 compared to 2005 and 2004 primarily due to Alliant Energy ceasing DD&A of assets held for salerelated to the WPC and Australian businesses in 2003 and the impact of businesses sold in 2003.

(b) Alliant Energy recorded the following pre-tax losses in 2005 related to the sale of various non-regulated businesses: energy servicesbusiness-$6.2 million; oil gathering pipeline system-$6.0 million; and biomass facility-$1.4 million. Alliant Energy recorded thefollowing pre-tax (gains) losses in 2003 related to the sale of various non-regulated businesses: Australian business-($72.1) million;affordable housing business-$60.7 million; WPC-$16.7 million; and SmartEnergy, Inc. business-$13.6 million. Ceasing DD&A ofWPC�s assets resulted in a higher carrying value of WPC�s assets and had a direct impact on the amount of loss on the sale.

(c) In accordance with impairment tests for long-lived assets within SFAS 144 and for goodwill within SFAS 142, �Goodwill and OtherIntangible Assets� (SFAS 142), Alliant Energy recorded pre-tax, non-cash valuation charges of $72.1 million (includes $10.9 millionrelated to goodwill), net of allocation to minority interest, in 2005 related to several of its China generating facilities. The decline in fairvalues of these generating facilities in 2005 was primarily due to the impacts of increased coal and transportation costs. The fair valueswere estimated using a combination of expected discounted future cash flows and market value indicators including updated marketinformation from recent sales agreements for these and other generating facilities.



(d) In accordance with impairment tests for long-lived assets within SFAS 144 and for goodwill within SFAS 142, Alliant Energy recordedpre-tax, non-cash valuation charges of $79.8 million (including $40.6 million related to goodwill) related to its energy services businessprimarily due to less favorable market conditions. The fair values of these businesses were estimated using a combination of expecteddiscounted future cash flows, market value indicators, input from financial advisors and bid information received in connection with thesale of the energy services business.

(e) In accordance with EITF Issue 87-24, �Allocation of Interest to Discontinued Operations,� Alliant Energy has allocated interest expenseto its China and Mexico businesses based on the amount of debt incurred by Resources that was specifically attributable to the operationsand capital requirements of these respective businesses. In 2005, 2004 and 2003, the amount of interest expense allocated to its Chinabusiness was $11.6 million, $13.1 million and $11.7 million, respectively. In 2005, 2004 and 2003, the amount of interest expenseallocated to its Mexico business was $5.7 million, $5.2 million and $3.9 million, respectively.

(f) Alliant Energy�s Australian business entered into electric derivative contracts that were not designated as hedges (as defined by SFAS133) to manage the electric commodity price risk associated with anticipated sales into the spot market. SFAS 133 income reflects thechange in the fair value of these electric derivative contracts.

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A summary of the components of assets and liabilities held for sale on Alliant Energy�s Consolidated Balance Sheets at Dec. 31 was asfollows (in millions):

2005 2004Assets held for sale:

Property, plant and equipment, net (a)$486.1 $631.4

Current assets (including cash) 84.4 146.3Investments (a) 194.7 440.8Other assets 37.4 83.3

Total assets held for sale $802.6 $1,301.8Liabilities held for sale:

Current liabilities (includes current portion of long-term debt) $58.4 $78.2Long-term debt 12.3 10.2AROs 179.0 368.4Other long-term liabilities and deferred credits 52.6 49.8Minority interest 25.9 44.7

Total liabilities held for sale 328.2 551.3

Net assets held for sale $474.4 $750.5

(a) Resources� investment in Mexico at Dec. 31, 2004 consisted of a secured loan receivable (including accrued interest income) of $82.5million from a Mexican development company, LDM Utility Co., S.A. de C.V. (LDMU), to build the utility infrastructure of a masterplanned resort community. In February 2005, Resources completed the transfer of ownership and control of the project by acquiring a97% interest in LDMU for an immaterial cash expenditure. Effective with the transfer of ownership, Alliant Energy removed the loanreceivable from �Investments� and recorded $83 million in �Property, plant and equipment, net� related to the real estate, golf course andutility assets owned by LDMU.

A summary of the components of cash flows for discontinued operations was as follows (in millions):

2005 2004 2003



Cash flows from operating activities (excluding intercompany cash flows)$12.3 $63.3

$33.9

Distributions to continuing operations(47.1) (20.2)

(5.9)

Net cash flows from (used for) operating activities(34.8) 43.1

28.0

Cash flows from (used for) investing activities (excl. intercompany cash flows) 2.9 (7.6) (25.3)Distributions to continuing operations (30.0) -- --


Cash flows used for financing activities (excl. intercompany cash flows) (5.2) (3.3) (47.9)Net change in loans with continuing operations 15.6 (32.9) 48.9

Net cash flows from (used for) financing activities 10.4 (36.2) 1.0

Net increase (decrease) in cash and temporary cash investments (51.5) (0.7) 3.7Cash and temporary cash investments held for sale at beginning of period 62.2 62.9 59.2

Cash and temporary cash investments held for sale at end of period $10.7 $62.2 $62.9

Supplemental cash flows information:Cash paid (refunded) during the period for:

Interest $3.6 $2.4 $21.5

Income taxes, net of refunds ($0.6) ($3.6) ($33.4)

(17) SALE OF WPL��S INTEREST IN KEWAUNEEIn July 2005, WPL completed the sale of its interest in Kewaunee to a subsidiary of Dominion Resources, Inc. (Dominion) and receivedproceeds of $75 million (after $4 million of post-closing adjustments), which it used for debt reduction. The sale proceeds are subject tofurther adjustments for an indemnity issued by WPL to cover certain potential costs Dominion may incur related to the unplanned outage atKewaunee in 2005. WPL recognized a $6 million obligation, the maximum exposure under the indemnity at closing, all of which wasoutstanding at Dec. 31, 2005. As of the closing date, WPL�s share of the carrying value of the Kewaunee assets and liabilities sold was asfollows (in millions):

94

Assets: Liabilities:Investments $172 AROs $207Property, plant and equipment, net * 85

Regulatory liabilities 46

Other 77 $253$334

* Includes nuclear fuel, net of amortization

The sale of Kewaunee resulted in a loss of approximately $16 million (excluding the benefits of the non-qualified decommissioning trustassets discussed below), which included the proceeds from the sale less the net assets identified in the



above table, adjusted by an estimate for the fair value of the indemnity and transaction-related closing costs. The loss was reflected as aregulatory asset given the PSCW approved the deferral of any loss and related costs of sale. Refer to Note 1(c) for further discussion.

WPL previously established two decommissioning funds to cover the eventual decommissioning of Kewaunee. Upon the sale closing,Dominion received WPL�s qualified decommissioning trust assets, which had a value of $172 million as of closing, and assumedresponsibility for the eventual decommissioning of Kewaunee. WPL retained ownership of the non-qualified decommissioning trust assets,which had a value of $83 million as of closing. In July 2005, WPL liquidated the retail portion of $60 million of its non-qualifieddecommissioning trust assets and used a majority of the proceeds to repay short-term debt. At Dec. 31, 2005, the wholesale portion of WPL�snon-qualified decommissioning trust assets equaled $23 million and was recorded in �Other investments� on Alliant Energy�s and WPL�sConsolidated Balance Sheets. Refer to Note 1(c) for discussion of WPL�s refunds of the non-qualified decommissioning trust assets to itsretail and wholesale customers.

Upon closing of the sale, WPL entered into a long-term purchased power agreement with Dominion to purchase energy and capacity at pricessimilar to what costs would have been had current ownership continued. The purchased power agreement extends through 2013, at which timeKewaunee�s current operating license will expire. At Dec. 31, 2005, WPL�s future minimum payments related to this agreement were $75million for 2006, $79 million for 2007, $71 million for 2008, $83 million for 2009, $82 million for 2010 and $213 million for 2011 through2013. These amounts are included in the purchased power commitments included in Note 11(b). In April 2004, WPL entered into anexclusivity agreement with Dominion. Under this agreement, if Dominion decides to extend the operating license of Kewaunee, Dominionmust negotiate only with WPL and WPSC for new purchased power agreements for the parties� respective share of the plant output thatwould extend beyond Kewaunee�s current operating license termination date. The exclusivity period extends until December 2011. Under thepurchased power agreement, if Kewaunee is off-line for a forced outage during the term of the agreement, Dominion has the obligation toprovide replacement power to WPL or pay performance damages to WPL based on the amount of energy not delivered and the price of energyin the market at the Kewaunee pricing location during the forced outage.

WPL�s assets and liabilities related to the Kewaunee sale agreement as of Dec. 31, 2004 have been reclassified as held for sale on AlliantEnergy�s and WPL�s Consolidated Balance Sheets. Refer to Note 16 for further discussion.

(18) SALE OF IPL��S INTEREST IN DAECIn January 2006, IPL completed the sale of its 70% ownership interest in DAEC to FPL Energy Duane Arnold, LLC (FPL Energy), asubsidiary of FPL Group, Inc. Under the sales agreement, FPL Energy purchased IPL�s interest in the nuclear generating facility and relatedinventories (nuclear fuel and material and supplies) and assumed various liabilities of IPL in exchange for net proceeds of approximately $329million. Such proceeds were net of purchase price adjustments, cash payments made at closing to FPL Energy of approximately $30 million,and approximately $7 million in certain transaction related costs. IPL used $130 million of the net proceeds to reduce its short-term debt, $125million to reduce its level of accounts receivable sold and the remainder for investments in short-term securities and general corporatepurposes. The cash payments made by IPL to FPL Energy at closing were in connection with FPL Energy�s assumption of decommissioning,employee benefit and certain other liabilities related to DAEC. The sales proceeds and related cash payments are subject to various post-closing adjustments. In addition to the proceeds received by IPL, other Alliant Energy subsidiaries received approximately $7 million inproceeds from FPL Energy related to other property purchased by FPL Energy and reimbursement for Alliant Energy�s forfeiture of itsmembership interest in the NMC upon the sale of DAEC.

IPL previously established two decommissioning funds to cover the eventual decommissioning of DAEC. Upon closing of the sale, FPLEnergy assumed responsibility for the eventual decommissioning of the facility and received the equivalent of $203 million of nucleardecommissioning trust assets, which included the qualified and non-qualified decommissioning trust fund assets of IPL valued at $188 millionas of Dec. 31, 2005, and a cash payment. On the closing date, the value of the decommissioning funds and the cash payments made exceededthe $203 million in decommissioning trust assets required to be transferred to FPL Energy by approximately $8 million. The $8 million ofexcess decommissioning trust assets will be retained by IPL and will be included with the regulatory liability related to the sale, which isdiscussed in more detail below.

95



In a related transaction in January 2006, IPL retired its capital lease obligation, including interest through the closing date, covering its 70%undivided interest in nuclear fuel for DAEC for approximately $40 million. IPL�s capital lease obligation was recorded in �Other currentliabilities� and �Current capital lease obligations� on Alliant Energy�s and IPL�s Consolidated Balance Sheets, respectively, at Dec. 31,2005.

The expected after-tax gain resulting from IPL�s portion of the sale will serve as the basis to establish a regulatory liability pursuant to theIUB order approving the sale. The regulatory liability will be used to offset AFUDC for future investments in new generation sited in Iowa.The regulatory liability will earn interest at a rate equivalent to the monthly average U.S. Treasury for three-year maturities. Due to theregulatory treatment, IPL does not expect the sale will have a significant impact on its operating results in 2006. At Dec. 31, 2005, IPL�s shareof the carrying value of the assets and liabilities included within the sale agreement was as follows (in millions):

Assets: Liabilities:Investments $188 AROs $179Property, plant and equipment, net * 242

Regulatory liabilities 48

Other 29 $227

$459

* Includes nuclear fuel, net of amortization

IPL�s assets and liabilities related to the DAEC sale agreement have been classified as held for sale on Alliant Energy�s and IPL�sConsolidated Balance Sheets as of Dec. 31, 2005 and 2004. Refer to Note 16 for additional information.

Upon closing of the sale, IPL entered into a long-term purchased power agreement with FPL Energy to buy energy and capacity from DAEC.The purchased power agreement extends through February 2014, concurrent with expiration of DAEC�s current operating license. Thestructure of the purchased power agreement is anticipated to result in costs for IPL�s electric customers that are lower than would beanticipated under IPL�s continued ownership. IPL�s current estimate of future payments, assuming a 90% capacity factor, related to thisagreement are $141 million for 2006, $154 million for 2007, $156 million for 2008, $165 million for 2009, $169 million for 2010, and $584million thereafter. The fixed monthly capacity payment in the agreement corresponds to IPL�s projected revenue requirement. The monthlyvariable payment to FPL Energy varies directly with the amount of energy delivered to IPL, which is based on a target capacity factor of 90%.If in a given month, FPL Energy delivers less than the energy amount corresponding to the 90% capacity factor, there will be a reduction inthe energy payment by IPL to reflect the lower fuel consumption as well as a corresponding adjustment in the capacity payment to FPLEnergy to proportionally compensate IPL for the under-delivery. This will ultimately result in a reduction in the DAEC component of theenergy adjustment clause recovered from customers. The converse is also true if the delivered energy exceeds the target amount. Under thepurchased power agreement, if DAEC is off-line for a planned or forced outage during the term of the agreement, FPL Energy has the option,but not the obligation, to provide replacement power to IPL.

(19) ASSET RETIREMENT OBLIGATIONSSFAS 143 requires that when an asset is placed in service the present value of any retirement costs associated with that asset for which AlliantEnergy has a legal obligation must be recorded as a liability with an equivalent amount added to the asset cost. The liability is accreted to itspresent value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, anentity settles the obligation for its recorded amount or incurs a gain or loss. On Dec. 31, 2005, Alliant Energy adopted FIN 47, which clarifiesthe term �conditional AROs,� as discussed in SFAS 143, and when an entity would have sufficient information to reasonably estimate the fairvalue of an ARO. FIN 47 concludes that conditional AROs are within the scope of SFAS 143.

The scope of SFAS 143 and FIN 47 as it relates to Alliant Energy applies to the removal, closure or dismantlement of several assets including,but not limited to, active ash landfills, water intake facilities, above and underground storage tanks, groundwater wells, transmission anddistribution equipment, easements, leases and the dismantlement of certain hydro facilities. It also applies to the remediation of asbestos, coalyards, ash ponds and polychlorinated biphenyls (PCB) contamination. Upon the adoption of FIN 47, AROs were recognized for asbestoscontamination, remediation of active landfills, PCB contamination and removal costs for above ground storage tanks.



96

A reconciliation of the changes in AROs associated with long-lived assets is as follows (in millions):

2005 2004Alliant Alliant

IPL WPL Energy IPL WPL EnergyBalance at Jan. 1

$-- $0.9 $0.9 $-- $0.6 $0.6

Adoption of FIN 4724.9 10.0 34.9 -- -- --

Accretion expense-- -- -- -- 0.3 0.3

Balance at Dec. 31$24.9 $10.9 $35.8 $-- $0.9 $0.9

If FIN 47 had been adopted as of Jan. 1, 2003, IPL and WPL would have recorded FIN 47 ARO liabilities of $23.5 million and $9.3 million atDec. 31, 2004 and $21.5 million and $8.8 million at Dec. 31, 2003, respectively. Upon adoption of SFAS 143 on Jan. 1, 2003, Alliant Energyrecognized a $3.9 million impact as a cumulative effect of a change in accounting principle at WPC (in 2003, Alliant Energy completed anIPO of WPC).

Refer to Notes 17 and 18 for AROs included in liabilities held for sale relating to the sales of WPL�s and IPL�s interests in Kewaunee andDAEC, respectively.

(20) VARIABLE INTEREST ENTITIESFIN 46R requires consolidation where there is a controlling financial interest in a variable interest entity or where the variable interest entitydoes not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. Aftermaking an ongoing exhaustive effort, Alliant Energy concluded it was unable to obtain the information necessary from the counterparties(subsidiaries of Calpine) for the Riverside and RockGen plant purchased power agreements, to determine whether the counterparties arevariable interest entities per FIN 46R, and if Alliant Energy is the primary beneficiary. These agreements are currently accounted for asoperating leases. The counterparties sell some or all of their generating capacity to WPL and can sell their energy output to WPL. AlliantEnergy�s maximum exposure to loss from these agreements is undeterminable due to the inability to obtain the necessary information tocomplete such evaluation. In 2005 and 2004, Alliant Energy�s (primarily WPL�s) costs, excluding fuel costs, related to the Riversideagreement were $65 million and $39 million, respectively. The Riverside plant was placed in service in June 2004. In 2005, 2004 and 2003,WPL�s costs, excluding fuel costs, related to the RockGen agreement were $18 million, $33 million and $33 million, respectively.

In December 2005, Calpine filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code. The RockGen facility ispart of the bankruptcy proceedings but the Riverside facility is excluded. WPL utilizes the RockGen facility primarily for capacity. AlliantEnergy is currently evaluating its options should the purchased power agreement be terminated by the bankruptcy trustees.

(21) RELATED PARTIES(a) ATC - Pursuant to various agreements, WPL receives a range of transmission services from ATC. WPL provides operation, maintenance,and construction services to ATC. WPL and ATC also bill each other for use of shared facilities owned by each party. ATC billed WPL $52million, $48 million and $41 million in 2005, 2004 and 2003, respectively. WPL billed ATC $9.3 million, $13 million and $12 million in2005, 2004 and 2003, respectively. At Dec. 31, 2005 and 2004, WPL owed ATC net amounts of $3.7 million and $2.9 million, respectively.ATC also provides operation and maintenance services to IPL and billed IPL $2.9 million, $2.8 million and $2.8 million in 2005, 2004 and



2003, respectively. In addition, in 2004, ATC received deposits from Resources of $3.6 million related to the construction of SFEF. Thesedeposits were returned to Resources in 2005.

(b) NMC - Alliant Energy received services from NMC for the management and operation of DAEC and Kewaunee. NMC billed IPL $81million, $57 million and $79 million in 2005, 2004 and 2003, respectively, for its allocated portion for DAEC. At Dec. 31, 2005 and 2004,IPL owed NMC $9.0 million and $8.8 million, respectively. NMC billed WPL indirectly, through WPSC, $18 million, $34 million and $33million in 2005, 2004 and 2003, respectively, for its allocated portion for Kewaunee. Refer to Notes 17 and 18 for discussion of WPL�s andIPL�s sales of their interests in Kewaunee and DAEC, respectively. As a result of these sales, Alliant Energy will no longer receive servicesfrom NMC.

(22) CONDENSED CONSOLIDATING FINANCIAL STATEMENTSAlliant Energy has fully and unconditionally guaranteed the payment of principal and interest on the senior notes and exchangeable seniornotes issued by Resources and, as a result, is required to present condensed consolidating financial statements. No Alliant Energy subsidiariesare guarantors of Resources� debt securities. The �Other Alliant Energy Subsidiaries� column includes amounts for IPL, WPL and CorporateServices. Alliant Energy�s condensed consolidating financial statements are as follows:

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Alliant Energy Corporation Condensed Consolidating Statements of Income

Alliant Energy Other Alliant Consolidated

Parent Energy Consolidating Alliant

Company Resources Subsidiaries Adjustments Energy

(in millions)

Year Ended Dec. 31, 2005

Operating revenues:

Utility:

Electric $- $- $2,320.6 $- $2,320.6

Gas - - 685.1 - 685.1

Other - - 85.6 - 85.6

Non-regulated - 195.6 287.9 (295.2) 188.3

- 195.6 3,379.2 (295.2) 3,279.6

Operating expenses:

Utility:

Electric production fuel and purchased power - - 1,009.3 - 1,009.3

Cost of gas sold - - 504.6 - 504.6

Other operation and maintenance - - 698.5 - 698.5

Non-regulated operation and maintenance 2.3 175.1 257.3 (264.7) 170.0

Depreciation and amortization 0.1 16.7 326.3 (22.8) 320.3

Taxes other than income taxes - 5.5 102.9 (7.4) 101.0

2.4 197.3 2,898.9 (294.9) 2,803.7

Operating income (loss) (2.4) (1.7) 480.3 (0.3) 475.9

Interest expense and other:

Interest expense 0.3 77.4 111.7 (13.6) 175.8



Loss on early extinguishment of debt - 54.4 - - 54.4

Equity income from unconsolidated investments - (33.2) (26.4) - (59.6)

Asset valuation charges - Brazil investments - 334.3 - - 334.3

Allowance for funds used during construction - - (10.1) 0.1 (10.0)

Preferred dividend requirements of subsidiaries - - 18.7 - 18.7

Interest income and other 2.7 (39.3) (6.1) 1.5 (41.2)

3.0 393.6 87.8 (12.0) 472.4

Income (loss) from continuing operations before income taxes (5.4) (395.3) 392.5 11.7 3.5

Income tax expense (benefit) 2.7 (197.6) 140.8 1.2 (52.9)

Income (loss) from continuing operations (8.1) (197.7) 251.7 10.5 56.4

Loss from discontinued operations, net of tax - (64.1) - - (64.1)

Net income (loss) ($8.1) ($261.8) $251.7 $10.5 ($7.7)


Operating revenues:

Utility:

Electric $- $- $2,009.0 $- $2,009.0

Gas - - 569.8 - 569.8

Other - - 90.6 - 90.6

Non-regulated - 141.2 328.7 (334.5) 135.4

- 141.2 2,998.1 (334.5) 2,804.8

Operating expenses:

Utility:

Electric production fuel and purchased power - - 747.4 - 747.4

Cost of gas sold - - 396.9 - 396.9



Depreciation and amortization 0.1 17.4 318.1 (18.7) 316.9


4.9 152.1 2,569.5 (330.0) 2,396.5




Loss on early extinguishment of debt - 8.9 - - 8.9

Equity income from unconsolidated investments - (9.4) (24.9) - (34.3)



Interest income and other (154.0) (49.8) (2.7) 153.5 (53.0)

(153.2) 24.6 77.4 149.9 98.7



Income (loss) from continuing operations before income taxes 148.3 (35.5) 351.2 (154.4) 309.6

Income tax expense (benefit) 2.8 (39.5) 129.4 (1.5) 91.2

Income from continuing operations 145.5 4.0 221.8 (152.9) 218.4

Loss from discontinued operations, net of tax - (72.9) - - (72.9)

Net income (loss) $145.5 ($68.9) $221.8 ($152.9) $145.5

98

Alliant Energy Corporation Condensed Consolidating Statement of Income




(in millions)


Operating revenues:

Utility:

Electric $- $- $1,917.1 $- $1,917.1

Gas - - 566.9 - 566.9

Other - - 104.2 - 104.2

Non-regulated - 143.7 331.2 (337.1) 137.8

- 143.7 2,919.4 (337.1) 2,726.0

Operating expenses:

Utility:

Electric production fuel and purchased power - - 730.6 - 730.6

Cost of gas sold - - 396.1 - 396.1



Depreciation and amortization - 18.4 284.7 (16.3) 286.8


2.7 157.7 2,491.1 (318.7) 2,332.8




Loss on early extinguishment of debt 1.7 15.2 - - 16.9

Equity (income) loss from unconsolidated investments - 3.3 (20.9) - (17.6)



Interest income and other (198.6) (32.1) 12.6 183.4 (34.7)



(187.8) 82.7 93.8 177.2 165.9

Income (loss) from continuing operations before income taxes 185.1 (96.7) 334.5 (195.6) 227.3

Income tax expense (benefit) 1.6 (63.0) 138.1 (1.1) 75.6

Income (loss) from continuing operations 183.5 (33.7) 196.4 (194.5) 151.7

Income from discontinued operations, net of tax - 37.8 - - 37.8

Income before cumulative effect of changes in

accounting principles 183.5 4.1 196.4 (194.5) 189.5

Cumulative effect of changes in accounting principles, net of tax - (6.0) - - (6.0)

Net income (loss) $183.5 ($1.9) $196.4 ($194.5) $183.5

Alliant Energy Corporation Condensed Consolidating Balance Sheet as of Dec. 31, 2005

Alliant Energy Other Consolidated

Parent Alliant Energy Consolidating Alliant


ASSETS (in millions)

Property, plant and equipment:

Utility:

Electric plant in service $- $- $5,887.3 $- $5,887.3

Other plant in service - - 1,188.4 - 1,188.4

Accumulated depreciation - - (2,741.7) - (2,741.7)

Leased Sheboygan Falls Energy Facility, net - - 120.2 (120.2) -

Other, net - - 137.5 - 137.5

Total utility - - 4,591.7 (120.2) 4,471.5

Non-regulated and other, net - 203.1 53.6 138.0 394.7

- 203.1 4,645.3 17.8 4,866.2

Current assets:

Cash and temporary cash investments 160.4 12.6 32.3 - 205.3

Restricted cash - 17.5 1.9 - 19.4

Production fuel, at average cost - - 55.7 - 55.7

Gas stored underground, at average cost - - 92.1 - 92.1

Regulatory assets - - 86.3 - 86.3

Assets held for sale - 286.9 515.7 - 802.6

Other 47.5 49.6 555.3 (130.4) 522.0

207.9 366.6 1,339.3 (130.4) 1,783.4



Investments:

Consolidated subsidiaries 2,221.2 - - (2,221.2) -

Investments in unconsolidated foreign entities - 188.6 - - 188.6

Other 14.1 11.3 216.1 - 241.5

2,235.3 199.9 216.1 (2,221.2) 430.1

Other assets 7.7 188.5 667.8 (210.6) 653.4

Total assets $2,450.9 $958.1 $6,868.5 ($2,544.4) $7,733.1

99

Alliant Energy Corporation Condensed Consolidating Balance Sheet (Continued) as of Dec. 31, 2005




CAPITALIZATION AND LIABILITIES (in millions)

Capitalization:

Common stock and additional paid-in capital $1,789.9 $255.3 $1,375.2 ($1,630.5) $1,789.9

Retained earnings 741.9 (217.7) 893.1 (675.0) 742.3

Accumulated other comprehensive loss (84.6) (33.9) (50.7) 84.6 (84.6)

Shares in deferred compensation trust (7.1) - - - (7.1)

Total common equity 2,440.1 3.7 2,217.6 (2,220.9) 2,440.5

Cumulative preferred stock of subsidiaries, net - - 243.8 - 243.8

Long-term debt, net (excluding current portion) - 582.2 1,332.6 - 1,914.8

2,440.1 585.9 3,794.0 (2,220.9) 4,599.1

Current liabilities:

Current maturities - 91.7 60.0 - 151.7

Commercial paper - - 263.0 - 263.0

Accounts payable 1.2 24.3 384.1 (54.3) 355.3

Regulatory liabilities - - 96.2 - 96.2

Liabilities held for sale - 93.7 234.5 - 328.2

Other 8.4 166.9 287.4 (76.8) 385.9

9.6 376.6 1,325.2 (131.1) 1,580.3

Other long-term liabilities and deferred credits:

Deferred income taxes (2.6) (32.0) 563.8 0.1 529.3

Pension and other benefit obligations 2.6 4.6 268.1 (18.6) 256.7

Other 1.2 18.5 917.4 (173.9) 763.2

1.2 (8.9) 1,749.3 (192.4) 1,549.2



Minority interest - 4.5 - - 4.5

Total capitalization and liabilities $2,450.9 $958.1 $6,868.5 ($2,544.4) $7,733.1

Alliant Energy Corporation Condensed Consolidating Balance Sheet as of Dec. 31, 2004




ASSETS (in millions)


Utility:

Electric plant in service $- $- $5,554.8 $- $5,554.8

Other plant in service - - 1,175.7 - 1,175.7

Accumulated depreciation - - (2,619.1) - (2,619.1)

Other, net - - 160.7 - 160.7

Total utility - - 4,272.1 - 4,272.1

Non-regulated and other, net - 328.3 65.0 (0.1) 393.2

- 328.3 4,337.1 (0.1) 4,665.3

Current assets:

Cash and temporary cash investments 101.1 66.9 34.4 - 202.4

Restricted cash - 8.4 4.8 - 13.2

Production fuel, at average cost - - 42.4 - 42.4

Gas stored underground, at average cost - - 64.9 - 64.9

Regulatory assets - - 61.7 - 61.7

Assets held for sale - 506.2 795.6 - 1,301.8

Other 1.2 62.6 449.0 (56.4) 456.4

102.3 644.1 1,452.8 (56.4) 2,142.8

Investments:

Consolidated subsidiaries 2,443.3 - - (2,443.3) -

Investments in unconsolidated foreign entities - 442.3 - - 442.3

Other 13.2 54.8 255.6 - 323.6

2,456.5 497.1 255.6 (2,443.3) 765.9

Other assets 7.2 61.6 682.6 (50.2) 701.2

Total assets $2,566.0 $1,531.1 $6,728.1 ($2,550.0) $8,275.2

100

Alliant Energy Corporation Condensed Consolidating Balance Sheet (Continued) as of Dec. 31, 2004






CAPITALIZATION AND LIABILITIES (in millions)

Capitalization:

Common stock and additional paid-in capital $1,763.3 $250.4 $1,374.9 ($1,625.3) $1,763.3

Retained earnings 871.9 44.1 841.0 (885.1) 871.9

Accumulated other comprehensive loss (67.1) (46.2) (20.9) 67.1 (67.1)

Shares in deferred compensation trust (6.7) -- -- -- (6.7)

Total common equity 2,561.4 248.3 2,195.0 (2,443.3) 2,561.4

Cumulative preferred stock of subsidiaries, net -- -- 243.8 -- 243.8

Long-term debt, net (excluding current portion) -- 889.8 1,399.6 -- 2,289.4

2,561.4 1,138.1 3,838.4 (2,443.3) 5,094.6

Current liabilities:

Current maturities -- 5.9 90.6 -- 96.5

Commercial paper -- -- 83.0 -- 83.0

Accounts payable 2.0 12.8 298.1 (48.7) 264.2

Regulatory liabilities -- -- 27.6 -- 27.6

Liabilities held for sale -- 142.4 408.9 -- 551.3

Other 1.5 70.8 259.5 (7.8) 324.0

3.5 231.9 1,167.7 (56.5) 1,346.6

Other long-term liabilities and deferred credits:

Deferred income taxes (2.8) 111.3 667.0 -- 775.5

Pension and other benefit obligations 3.7 5.2 191.9 (15.0) 185.8

Other 0.2 39.8 863.1 (35.2) 867.9

1.1 156.3 1,722.0 (50.2) 1,829.2

Minority interest -- 4.8 -- -- 4.8

Total capitalization and liabilities $2,566.0 $1,531.1 $6,728.1 ($2,550.0) $8,275.2

Alliant Energy Corporation Condensed Consolidating Statement of Cash Flows for the Year Ended Dec. 31, 2005




(in millions)

Continuing Operations:

Net cash flows from (used for) operating activities ($13.6) $137.5 $485.6 ($9.3) $600.2



Cash flows from (used for) investing activities:

Construction and acquisition expenditures:

Utility business -- -- (457.5) 0.3 (457.2)

Non-regulated businesses -- (60.3) -- -- (60.3)

Alliant Energy Corporate Services, Inc. and other (0.1) -- (10.0) -- (10.1)

Purchases of emission allowances -- -- (70.7) -- (70.7)

Sales of emission allowances -- -- 74.0 -- 74.0

Proceeds from other asset sales -- 42.7 81.2 (0.3) 123.6

Purchases of securities within nuclear decommissioning trusts -- -- (83.6) -- (83.6)

Sales of securities within nuclear decommissioning trusts -- -- 151.2 -- 151.2

Changes in restricted cash within nuclear decommissioning trusts -- -- (21.1) -- (21.1)

Other 205.4 66.6 (1.9) (204.8) 65.3

Net cash flows from (used for) investing activities 205.3 49.0 (338.4) (204.8) (288.9)

Cash flows used for financing activities:

Common stock dividends (121.9) -- (199.6) 199.6 (121.9)

Proceeds from issuance of common stock 29.3 -- -- -- 29.3

Proceeds from issuance of long-term debt -- 167.4 88.4 -- 255.8

Reductions in long-term debt -- (385.2) (186.7) -- (571.9)

Net change in commercial paper and other short-term borrowings (39.7) 39.8 179.9 -- 180.0

Other (0.1) (62.8) (31.3) 14.5 (79.7)

Net cash flows used for financing activities (132.4) (240.8) (149.3) 214.1 (308.4)

Net increase (decrease) in cash and temporary cash investments 59.3 (54.3) (2.1) -- 2.9

Cash and temporary cash investments at beginning of period 101.1 66.9 34.4 -- 202.4

Cash and temporary cash investments at end of period $160.4 $12.6 $32.3 $- $205.3

Discontinued Operations:

Net cash flows used for operating activities $- ($34.8) $- $- ($34.8)

Net cash flows used for investing activities -- (27.1) -- -- (27.1)

Net cash flows from financing activities -- 10.4 -- -- 10.4

Net decrease in cash and temporary cash investments -- (51.5) -- -- (51.5)

Cash and temporary cash investments held for sale at beginning of period -- 62.2 -- -- 62.2

Cash and temporary cash investments held for sale at end of period $- $10.7 $- $- $10.7

101

Alliant Energy Corporation Condensed Consolidating Statements of Cash Flows




Year Ended Dec. 31, 2004 (in millions)




Net cash flows from (used for) operating activities $142.5 ($23.3) $550.6 ($171.6) $498.2

Cash flows used for investing activities:


Utility business -- -- (538.6) -- (538.6)


Alliant Energy Corporate Services, Inc. and other -- -- (15.4) -- (15.4)

Proceeds from asset sales -- 40.0 2.3 -- 42.3




Other (79.4) (13.6) (15.3) 79.9 (28.4)

Net cash flows used for investing activities (79.4) (53.0) (582.0) 79.9 (634.5)

Cash flows from financing activities:




Reductions in long-term debt -- (47.5) (62.0) -- (109.5)

Net change in commercial paper and other short-term borrowings 1.1 (0.3) (25.3) -- (24.5)

Other -- 40.9 57.0 (99.3) (1.4)

Net cash flows from financing activities 2.2 61.7 3.7 91.7 159.3

Net increase (decrease) in cash and temporary cash investments 65.3 (14.6) (27.7) -- 23.0

Cash and temporary cash investments at beginning of period 35.8 81.5 62.1 -- 179.4



Net cash flows from operating activities $- $43.1 $- $- $43.1


Net cash flows used for financing activities -- (36.2) -- -- (36.2)

Net decrease in cash and temporary cash investments -- (0.7) -- -- (0.7)





Net cash flows from (used for) operating activities $199.5 ($42.1) $492.6 ($211.4) $438.6

Cash flows from (used for) investing activities:


Utility business -- -- (689.7) 108.9 (580.8)




Alliant Energy Corporate Services, Inc. and other (0.1) -- (9.5) -- (9.6)

Proceeds from asset sales -- 609.5 21.8 (108.9) 522.4




Other (403.5) (18.0) 56.8 403.2 38.5

Net cash flows from (used for) investing activities (403.6) 366.3 (634.7) 403.2 (268.8)

Cash flows from (used for) financing activities:



Proceeds from issuance of preferred stock of subsidiary -- -- 38.7 -- 38.7


Reductions in long-term debt (24.0) (76.6) (266.5) -- (367.1)

Net change in commercial paper and other short-term borrowings 23.0 (165.4) (30.6) -- (173.0)

Other (3.4) (64.9) 331.7 (351.5) (88.1)

Net cash flows from (used for) financing activities 239.9 (246.9) 188.6 (191.8) (10.2)

Net increase in cash and temporary cash investments 35.8 77.3 46.5 -- 159.6

Cash and temporary cash investments at beginning of period -- 4.2 15.6 -- 19.8



Net cash flows from operating activities $- $28.0 $- $- $28.0


Net cash flows from financing activities -- 1.0 -- -- 1.0

Net increase in cash and temporary cash investments -- 3.7 -- -- 3.7



102

Alliant Energy Corporation Condensed Consolidating Statements of Cash Flows (Continued)




(in millions)

Supplemental Cash Flows Information:


Cash paid (refunded) during the period for:

Interest, net of capitalized interest $0.3 $64.1 $117.6 $- $182.0

Income taxes, net of refunds 5.5 (119.7) 196.9 -- 82.7



Noncash investing and financing activities:

Capital lease obligations incurred -- -- 129.7 (123.8) 5.9




Income taxes, net of refunds (2.5) (2.3) 38.0 -- 33.2


Capital lease obligations incurred -- -- 17.7 -- 17.7




Income taxes, net of refunds (27.3) (87.8) 131.4 -- 16.3


Debt repaid directly by buyer in the sale of Australian business -- 127.6 -- -- 127.6

Debt assumed by buyer of affordable housing business -- 88.0 -- -- 88.0

Capital lease obligations incurred -- -- 14.8 -- 14.8

103


To the Board of Directors and Shareowners of Interstate Power and Light Company:

We have audited the accompanying consolidated balance sheets and statements of capitalization of Interstate Power and Light Company andsubsidiaries (the �Company�) as of December 31, 2005 and 2004, and the related consolidated statements of income, cash flows, and changesin common equity for each of the three years in the period ended December 31, 2005. Our audits also included the financial statementschedule listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of theCompany�s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on ouraudits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company�s internal control over financialreporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31,2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financialstatement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all materialrespects the information set forth therein.

/s/ DELOITTE & TOUCHE LLP



DELOITTE & TOUCHE LLP


104

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF INCOME


(in millions)Operating revenues:Electric utility $1,246.7 $1,069.2 $1,007.0Gas utility 362.8 316.0 294.5Steam and other 72.2 74.4 69.7

1,681.7 1,459.6 1,371.2

Operating expenses:Electric production fuel and purchased power 408.5 315.9 320.9Cost of gas sold 272.7 231.1 209.8Other operation and maintenance 439.4 426.2 406.6Depreciation and amortization 196.9 188.4 163.4Taxes other than income taxes 60.2 57.8 51.1

1,377.7 1,219.4 1,151.8


Interest expense and other:Interest expense 67.7 67.9 65.4Allowance for funds used during construction (6.7) (14.0) (16.7)Interest income and other (2.9) (1.1) (1.3)

58.1 52.8 47.4

Income before income taxes 245.9 187.4 172.0

Income taxes 80.8 61.7 71.3

Net income 165.1 125.7 100.7

Preferred dividend requirements 15.4 15.4 13.6

Earnings available for common stock $149.7 $110.3 $87.1




105

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED BALANCE SHEETS


(in millions)Property, plant and equipment:Electric plant in service $3,840.2 $3,649.4Gas plant in service 360.5 345.1Steam plant in service 61.1 60.2Other plant in service 225.4 215.8Accumulated depreciation (1,687.1) (1,581.5)

Net plant 2,800.1 2,689.0Construction work in progress 81.3 94.0Other, less accumulated depreciation of $3.6 and $3.1 1.8 3.1

2,883.2 2,786.1

Current assets:Cash and temporary cash investments 0.7 0.1Accounts receivable:Customer, less allowance for doubtful accounts of $2.5 and $1.6 103.3 95.3Associated companies 1.7 1.8Other, less allowance for doubtful accounts of $0.1 and $1.0 27.6 25.4

Income tax refunds receivable 27.5 2.3Production fuel, at average cost 35.5 26.5Materials and supplies, at average cost 16.0 18.5Gas stored underground, at average cost 51.9 34.6Regulatory assets 53.6 40.6Assets held for sale 489.6 486.7Other 14.8 10.3

822.2 742.1

Investments 15.6 14.9


255.6 326.0

Total assets $3,976.6 $3,869.1




106

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED BALANCE SHEETS (Continued)



Capitalization (Refer to Consolidated Statements of Capitalization):Common stock - $2.50 par value - authorized 24,000,000 shares;13,370,788 shares outstanding $33.4 $33.4

Additional paid-in capital 746.4 746.3Retained earnings 420.5 380.7Accumulated other comprehensive loss (47.5) (18.1)


Cumulative preferred stock 183.8 183.8Long-term debt, net (excluding current portion) 893.3 960.4

2,229.9 2,286.5

Current liabilities:Current maturities 60.0 2.7Commercial paper 169.5 36.0Capital lease obligations 40.2 13.7Accounts payable 146.4 125.5Accounts payable to associated companies 18.9 21.0Regulatory liabilities 10.0 3.8Accrued interest 17.0 16.8Accrued taxes 67.8 68.1Liabilities held for sale 232.3 212.8Other 46.0 40.0

808.1 540.4

Other long-term liabilities and deferred credits:Deferred income taxes 341.6 433.0Deferred investment tax credits 20.9 24.1Regulatory liabilities 356.3 388.8Pension and other benefit obligations 124.5 77.4Other 95.3 118.9

938.6 1,042.2





107

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)Cash flows from operating activities:Net income $165.1 $125.7 $100.7Adjustments to reconcile net income to net cashflows from operating activities:Depreciation and amortization 196.9 188.4 163.4Other amortizations 21.3 21.6 18.5Deferred tax expense (benefit) and investment tax credits 7.6 34.6 35.1Refueling outage provision (5.2) 4.9 (8.9)Other (3.3) (10.7) (9.0)

Other changes in assets and liabilities:Accounts receivable (35.1) 0.9 20.9Sale of accounts receivable 25.0 (51.0) 40.0Income tax refunds receivable (25.2) 32.5 (28.4)Regulatory assets 107.4 (37.2) (38.6)Accounts payable 34.0 24.7 3.4Regulatory liabilities (68.7) 5.8 15.9Deferred income taxes (86.0) 44.1 (18.9)Benefit obligations and other (1.8) (36.7) 28.3


Cash flows used for investing activities:Utility construction and acquisition expenditures (272.2) (327.1) (538.0)Purchases of emission allowances (70.7) -- --Sales of emission allowances 74.0 -- --Purchases of securities within nuclear decommissioning trusts (77.5) (35.1) (38.4)Sales of securities within nuclear decommissioning trusts 67.8 18.7 21.2Changes in restricted cash within nuclear decommissioning trusts (3.8) 4.3 6.0Other (25.6) (30.5) 16.6


Cash flows from (used for) financing activities:Common stock dividends (109.9) (102.0) (89.1)Preferred stock dividends (15.4) (15.4) (13.6)Capital contribution from parent -- 100.0 168.8Proceeds from issuance of preferred stock -- -- 38.7Proceeds from issuance of long-term debt 88.4 125.0 200.0Reductions in long-term debt (98.7) -- (196.5)



Net change in commercial paper 133.5 (71.5) 107.5Principal payments under capital lease obligations (13.2) (13.4) (13.3)Other (8.1) (2.6) 3.7

Net cash flows from (used for) financing activities (23.4) 20.1 206.2

Net increase (decrease) in cash and temporary cash investments 0.6 (2.0) (4.0)

Cash and temporary cash investments at beginning of period 0.1 2.1 6.1

Cash and temporary cash investments at end of period $0.7 $0.1 $2.1

Supplemental cash flows information:Cash paid (refunded) during the period for:

Interest $75.7 $67.8 $65.2

Income taxes, net of refunds $125.5 ($7.8) $63.1

Noncash investing and financing activities:Capital lease obligations incurred $5.9 $17.7 $14.8


108

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CAPITALIZATION

December 31,2005 2004

(dollars in millions, exceptper share amounts)


Cumulative preferred stock, net:Cumulative, liquidation preference $25 per share, not mandatorily redeemable

- authorized 16,000,000 shares:8.375% series, 6,000,000 shares outstanding, redeemable on or after March 15, 2013 150.0 150.07.1% series, 1,600,000 shares outstanding, redeemable on or after Sep. 15, 2008 40.0 40.0

190.0 190.0Less: discount (6.2) (6.2)

183.8 183.8

Long-term debt, net:Collateral Trust Bonds:



7.25% series, due 2006 60.0 60.06.875% series, due 2007 55.0 55.06% series, due 2008 50.0 50.07% series, retired early in 2005 - 50.05.5% series, retired early in 2005 - 19.4

165.0 234.4First Mortgage Bonds:

8% series, due 2007 25.0 25.0

Pollution Control Revenue Bonds:3.6%, due 2008 2.3 2.36.25%, due 2009 1.0 1.0Variable rate (3.89% at Dec. 31, 2005), due 2010, partially retired early in 2005 3.2 10.9Variable rate (3.5% at Dec. 31, 2005), due 2014 38.4 -3.6% through October 2008 (variable or fixed rate thereafter), due 2023 10.0 10.0Variable rate (2.55% at Dec. 31, 2004), retired early in 2005 - 7.76.35%, retired early in 2005 - 5.76.3%, retired early in 2005 - 5.62.5%, matured in 2005 - 2.7

54.9 45.9Other:

Senior debentures, 6.625%, due 2009 135.0 135.0Senior debentures, 6.75%, due 2011 200.0 200.0Senior debentures, 5.875%, due 2018 100.0 100.0Senior debentures, 5.5%, due 2025 50.0 -Senior debentures, 6.45%, due 2033 100.0 100.0Senior debentures, 6.3%, due 2034 125.0 125.0

710.0 660.0

Total, gross 954.9 965.3Less:

Current maturities (60.0) (2.7)Unamortized debt discount, net (1.6) (2.2)

Total long-term debt, net 893.3 960.4



109

INTERSTATE POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY



AccumulatedAdditional Other Total

Common Paid-In Retained Comprehensive CommonStock Capital Earnings Loss Equity

(in millions)2003:Beginning balance (a) $33.4 $477.7 $374.4 ($18.8) $866.7

Earnings available for common stock 87.1 87.1Minimum pension liability adjustment,net of tax of $1.3 1.7 1.7

Total comprehensive income 88.8Common stock dividends (89.1) (89.1)Capital contribution from parent 168.8 168.8Other (0.4) (0.4)

Ending balance 33.4 646.1 372.4 (17.1) 1,034.8

2004:Earnings available for common stock 110.3 110.3Minimum pension liability adjustment,net of tax of ($1.0) (1.0) (1.0)

Total comprehensive income 109.3Common stock dividends (102.0) (102.0)Capital contribution from parent 100.0 100.0Other 0.2 0.2

Ending balance 33.4 746.3 380.7 (18.1) 1,142.3

2005:Earnings available for common stock 149.7 149.7Minimum pension liability adjustment,

net of tax of ($16.6) (29.4) (29.4)

Total comprehensive income 120.3Common stock dividends (109.9) (109.9)Other 0.1 0.1

Ending balance $33.4 $746.4 $420.5 ($47.5) $1,152.8

(a) Accumulated other comprehensive loss at Jan. 1, 2003 consisted entirely of minimum pension liability adjustments.


110



INTERSTATE POWER AND LIGHT COMPANYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Except as modified below, the Alliant Energy Corporation (Alliant Energy) �Notes to Consolidated Financial Statements� are incorporated byreference insofar as they relate to Interstate Power and Light Company (IPL) and incorporate the disclosures relating to IPL contained in thefollowing notes of the Alliant Energy �Notes to Consolidated Financial Statements�:

Summary of Significant Accounting Policies Note 1(a) to 1(d), 1(f) to 1(j), 1(l), 1(n), 1(o), 1(r), 1(t)Leases Note 3Sales of Accounts Receivable Note 4Income Taxes Note 5 4th paragraphBenefit Plans Note 6(a) 1st, 2nd, 8th, 10th, 11th, 14th, 15th, 17th and 18th paragraphsCommon and Preferred Stock Note 7(a) 2nd and 4th paragraphs and 7(b)Debt Note 8(a) and 8(b) 1st, 2nd, 7th and 9th paragraphsInvestments and Estimated Fair Value of

Financial Instruments Note 9 1st, 2nd and 3rd paragraphsDerivative Financial Instruments Note 10(a) 1st, 2nd and 5th paragraphs and 10(b)Commitments and Contingencies Note 11(b), 11(c), 11(e), 11(f)Jointly-Owned Electric Utility Plant Note 12Goodwill and Other Intangible Assets Note 14Sale of IPL�s Interest in the Duane Arnold

Energy Center (DAEC) Note 18Asset Retirement Obligations (AROs) Note 19Variable Interest Entities Note 20 1st paragraphRelated Parties Note 21

The notes that follow herein set forth additional specific information for IPL and are numbered to be consistent with the Alliant Energy�Notes to Consolidated Financial Statements.�

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) General - The consolidated financial statements include the accounts of IPL and its consolidated subsidiaries. IPL is a direct subsidiary ofAlliant Energy and is engaged principally in the generation, transmission, distribution and sale of electric energy; the purchase, distribution,transportation and sale of natural gas; and the provision of steam and various other energy-related services. IPL�s primary service territoriesare located in Iowa and southern Minnesota.

(3) LEASES(a) Operating Leases - IPL�s operating lease rental expenses for 2005, 2004 and 2003 were $6.7 million, $6.7 million and $6.8 million,respectively. Contingent rentals from operating leases that were excluded from these amounts were $2.3 million, $2.7 million and $3.1 millionfor 2005, 2004 and 2003, respectively. At Dec. 31, 2005, IPL�s future minimum lease payments, excluding contingent rentals, were as follows(in millions):

PresentLess: value of net

amount minimumrepresenting capital lease

2006 2007 2008 2009 2010 Thereafter Total interest paymentsOperating leases $6 $5 $5 $4 $3 $19 $42 n/a n/aSynthetic leases 1 1 1 2 4 -- 9 n/a n/aCapital leases 40 -- -- -- -- -- 40 $-- $40



The synthetic leases in the above table relate to the financing of utility railcars. The entities that lease these assets to IPL do not meet theconsolidation requirements per Financial Accounting Standards Board Interpretation No. 46R, �Consolidation of Variable Interest Entities,�and are not included on IPL�s Consolidated Balance Sheets. IPL has guaranteed the residual value of its synthetic leases which total $6million in the aggregate. The guarantees extend through the maturity of each respective underlying lease with remaining terms up to fiveyears. Residual value guarantee amounts have been included in the above table.

111

(5) INCOME TAXESThe components of income taxes for IPL were as follows (in millions):

2005 2004 2003Current tax expense (benefit):

Federal $66.1$28.5

$31.6

State 9.9 (1.3) 5.1Deferred tax expense (benefit):

Federal 8.0 40.1 32.5State 3.0 (2.0) 6.2

Research and development tax credits (2.8) -- (0.4)Amortization of investment tax credits and other (3.4) (3.6) (3.7)

$80.8 $61.7 $71.3

Alliant Energy files a consolidated federal income tax return. Under the terms of an agreement between Alliant Energy and its subsidiaries, thesubsidiaries calculate their respective federal income tax provisions and make payments to or receive payments from Alliant Energy as if theywere separate taxable entities.

In 2005, 2004 and 2003, IPL realized net benefits (expenses) of $6.6 million, ($1.3) million and $8.5 million, respectively, related to stateapportionment and allocation of parent tax benefits.

The overall effective income tax rates shown in the following table were computed by dividing total income tax expense by income beforeincome taxes.

2005 2004 2003Statutory federal income tax rate 35.0%

35.0%35.0%

State income taxes, net of federal tax benefits 3.6 1.4 3.6Effect of rate making on property related differences 1.5 2.3 6.3Research and development tax credits (1.1) -- (0.2)Amortization of investment tax credits (1.3) (1.9) (2.1)Adjustment of prior period taxes (5.9) (3.9) 0.7Other items, net 1.1 -- (1.8)

Overall effective income tax rate 32.9% 32.9% 41.5%

In 2005, IPL recorded $7.5 million of income tax benefits related to the impact of issues resolved in a federal income tax audit, which arereflected in �Adjustment of prior period taxes� in the above table.




2005 2004Deferred Deferred Tax Deferred Deferred Tax

Tax Assets Liabilities Net Tax Assets Liabilities NetProperty ($14.7) $450.3 $435.6 ($17.2) $519.2 $502.0Decommissioning (30.4) -- (30.4) (16.4) -- (16.4)Mixed service costs -- -- -- (30.0) -- (30.0)Pension and other benefit

obligations (45.9) -- (45.9) (25.9) -- (25.9)Emission allowances (14.7) -- (14.7) -- -- --Other (19.5) 24.8 5.3 -- 3.6 3.6

($125.2) $475.1 $349.9 ($89.5) $522.8 $433.3

2005 2004Other current liabilities $8.3 $0.3Deferred income taxes 341.6 433.0

Total deferred tax liabilities $349.9 $433.3

112

(6) BENEFIT PLANS(a) Pension Plans and Other Postretirement Benefits - Substantially all of IPL�s employees are covered by several non-contributorydefined benefit pension plans. The assumptions at the measurement date of Sep. 30 for IPL�s qualified pension benefits and otherpostretirement benefits were equal to the assumptions used for Alliant Energy�s pension benefits and other postretirement benefits,respectively, except for the rate of compensation increase. IPL�s rates of compensation increase for its qualified pension benefits were 3.5%for 2005, 2004 and 2003.

The components of IPL�s qualified pension benefits and other postretirement benefits costs were as follows (in millions):

Qualified Pension Benefits Other Postretirement Benefits2005 2004 2003 2005 2004 2003

Service cost $6.5 $6.1 $5.1 $3.7 $3.4$2.2

Interest cost 13.8 12.7 12.3 7.8 7.4 8.5Expected return on plan assets (16.0) (13.5) (11.5) (5.2) (4.8) (3.9)Amortization of:

Transition obligation (asset) (0.2) (0.2) (0.2) 0.9 0.9 2.6Prior service cost 1.3 1.3 1.3 (0.9) (0.8) (0.2)Actuarial loss 2.0 2.0 1.9 3.4 2.9 1.6

Special termination benefits -- -- -- 0.5 -- --$7.4 $8.4 $8.9 $10.2 $9.0 $10.8

In the above table, the pension benefits costs represent only those respective costs for bargaining unit employees of IPL covered under thebargaining unit pension plans that are sponsored by IPL. The other postretirement benefits costs represent costs for all IPL employees. AlliantEnergy Corporate Services, Inc. (Corporate Services) provides services to IPL. The following table includes qualified pension benefits costsfor IPL�s non-bargaining employees who are participants in other Alliant Energy plans, and the allocated pension and other postretirementbenefits costs associated with Corporate Services for IPL as follows (in millions):




Non-bargaining IPL employeesparticipating in other plans $1.3 $3.0 $4.4 N/A N/A N/A

Allocated Corporate Services costs 3.5 3.5 3.2 $2.4 $2.6 $1.5


1% Increase 1% DecreaseEffect on total of service and interest cost components $1.3 ($1.1)Effect on postretirement benefit obligation $11.6 ($10.6)

113

The benefit obligations and assets associated with IPL�s non-bargaining employees who are participants in other Alliant Energy plans arereported in Alliant Energy�s Consolidated Financial Statements and are not reported in the following tables. A reconciliation of the fundedstatus of IPL�s plans to the amounts recognized on IPL�s Consolidated Balance Sheets at Dec. 31 was as follows (in millions):

Qualified PensionBenefits

Other PostretirementBenefits

2005 2004 2005 2004Change in projected benefit obligation:

Net projected benefit obligation at beginning of year $226.8 $209.7 $133.2 $132.5Service cost 6.5 6.1 3.7 3.4Interest cost 13.8 12.7 7.8 7.4


--

-0.5 0.3

Plan amendments-

--

-(1.2) (2.1)

Actuarial loss (gain) 28.8 6.0 (0.6) 0.1

Special termination benefits-

--

-0.5

--

Gross benefits paid (8.5) (7.7) (8.3) (8.4)Net projected benefit obligation at end of year 267.4 226.8 135.6 133.2

Change in plan assets:Fair value of plan assets at beginning of year 181.7 153.6 68.1 58.8Actual return on plan assets 20.8 16.9 5.7 5.1

Employer contributions-

-18.9 9.9 12.3


--

-0.5 0.3

Gross benefits paid (8.5) (7.7) (8.3) (8.4)Fair value of plan assets at end of year 194.0 181.7 75.9 68.1

Funded status at end of year (73.4) (45.1) (59.7) (65.1)Unrecognized net actuarial loss 70.1 48.2 45.0 49.6Unrecognized prior service cost 7.1 8.3 (3.2) (4.7)



Unrecognized net transition obligation (asset) (0.1) (0.3) 4.2 6.7



Prepaid benefit cost $3.9 $11.1 $2.0 $0.5

Accrued benefit cost (0.3)-

-(15.7) (14.0)

Additional minimum liability (32.7) (17.6)-

--

-

Intangible asset 7.1 8.3-

--

-

Accumulated other comprehensive loss 25.7 9.3-

--

-Net amount recognized at measurement date 3.7 11.1 (13.7) (13.5)

Contributions paid after Sep. 30 and prior to Dec. 31-

--

-2.9 2.6


In addition to the additional minimum pension liability in the previous table, Corporate Services allocated to IPL an additional minimumliability at Dec. 31, 2005 and 2004 of $54 million and $25 million, respectively. Included in the following table are IPL�s accumulated benefitobligations, aggregate amounts applicable to qualified pension and other postretirement benefits with accumulated benefit obligations inexcess of plan assets, as well as qualified pension plans with projected benefit obligations in excess of plan assets as of the measurement dateof Sep. 30 (in millions):

114




of plan assets:Accumulated benefit obligations 223.1 188.2 135.6 133.2Fair value of plan assets 194.0 181.7 75.9 68.1



Postretirement benefit plans are funded via specific assets within certain retirement plans (401(h) assets) as well as Voluntary Employees�Beneficiary Association (VEBA) trusts. The asset allocation of the 401(h) assets mirror the qualified pension plan assets and the assetallocation of the VEBA trusts are reflected in the following table under �Other Postretirement Benefit Plans.� The asset allocation for IPL�squalified pension and other postretirement benefit plans at Sep. 30, 2005 and 2004, and the qualified pension plan target allocation for 2005were as follows:

Other PostretirementQualified Pension Plans Benefit Plans



Target Percentage of Plan Percentage of PlanAllocation Assets at Sep. 30, Assets at Sep. 30,


100% 100% 100% 100%

IPL estimates that funding for the qualified pension plans for the bargaining units and other postretirement benefits plans during 2006 will be$15 million and $9 million, respectively.



$18.5 $19.6 $20.8 $22.4 $23.7 $143.9

Alliant Energy sponsors several non-qualified pension plans that cover certain current and former key employees. The pension expenseallocated to IPL for these plans was $3.1 million, $3.2 million and $3.1 million for 2005, 2004, and 2003, respectively.

(8) DEBT(b) Long-Term Debt - IPL�s debt maturities for 2006 to 2010 are $60 million, $80 million, $52 million, $136 million and $3 million,respectively. The carrying value of IPL�s long-term debt (including current maturities) at Dec. 31, 2005 and 2004 was $953 million and $963million, respectively. The fair value, based upon the market yield of similar securities and quoted market prices, was $1.0 billion at both Dec.31, 2005 and 2004. IPL�s unamortized debt issuance costs recorded in �Deferred charges and other� on IPL�s Consolidated Balance Sheetswere $6.0 million and $6.1 million at Dec. 31, 2005 and 2004, respectively.

(11) COMMITMENTS AND CONTINGENCIES(a) Construction and Acquisition Expenditures - IPL has made certain commitments in connection with its 2006 capital expenditures.

115

(b) Purchase Obligations - Based on the System Coordination and Operating Agreement, Alliant Energy annually allocates purchased powercontracts to IPL and Wisconsin Power and Light Company (WPL), based on various factors such as resource mix, load growth and resourceavailability. The amounts in the following table reflect these allocated contracts. However, for 2006 and 2007, system-wide purchased powercontracts of $218.7 million (3.3 million megawatt-hours (MWhs)) and $62.9 million (1.3 million MWhs), respectively, have not yet beendirectly assigned to IPL and WPL since the specific needs of each utility are not yet known. Refer to Note 21 for additional information. IPLenters into coal transportation contracts that are directly assigned to its specific generating stations, the amounts of which are included in thefollowing table. Also included in the following table are IPL�s respective portion of coal and coal transportation contracts related to jointly-owned generating stations not operated by IPL. In addition, Corporate Services entered into system-wide coal contracts on behalf of IPL andWPL for 2006 to 2010 of $70.9 million (10.1 million tons), $55.7 million (7.6 million tons), $35.8 million (5.0 million tons), $18.5 million(2.5 million tons) and $4.8 million (0.6 million tons), respectively, to allow flexibility for the changing needs of the quantity of coal consumedby each. Coal contract quantities are allocated to specific IPL or WPL generating stations at or before the time of delivery based on variousfactors including projected heat input requirements, combustion compatibility and efficiency. These system-wide coal contracts have not yetbeen directly assigned to IPL and WPL since the specific needs of each utility are not yet known. At Dec. 31, 2005, IPL�s minimumcommitments were as follows (dollars and dekatherms (Dths) in millions; MWhs and tons in thousands):




2006$2.3 -- $25.0 1,326 $155.8 13

2007 0.1--

16.6951

20.5--

2008 0.1--

8.9324

0.4--

20090.1 -- 9.1 332 0.3 --

20100.1 -- 7.1 83 0.3 --

Thereafter0.1 -- 21.5 -- 0.2 --

$2.8 -- $88.2 3,016 $177.5 13

Also, at Dec. 31, 2005, IPL�s other purchase obligations, which represent individual commitments incurred during the normal course ofbusiness which exceeded $1.0 million at Dec. 31, 2005, were $6 million for 2006. This excludes lease obligations which are included in Note3. Refer to Note 18 for details on a long-term purchased power agreement entered into upon IPL�s sale of its interest in DAEC in January2006, the amounts of which are not reflected in the above table.

(13) SEGMENTS OF BUSINESSIPL is a utility serving customers in Iowa, Minnesota and Illinois and includes three segments: a) electric operations; b) gas operations; and c)other, which includes the operations of the steam business, various other energy-related products and services and the unallocated portions ofthe utility business. Various line items in the following tables are not allocated to the electric and gas segments for management reportingpurposes and therefore are included in �Total.� Intersegment revenues were not material to IPL�s operations and there was no single customerwhose revenues were 10% or more of IPL�s consolidated revenues. Certain financial information relating to IPL�s significant businesssegments was as follows (in millions):

Electric Gas Other Total2005Operating revenues $1,246.7 $362.8 $72.2 $1,681.7Depreciation and amortization 179.9 11.4 5.6 196.9Operating income (loss) 291.1 14.7 (1.8) 304.0Interest expense, net of allowance for funds used

during construction (AFUDC) 61.0Interest income and other (2.9)Income tax expense 80.8Net income 165.1Preferred dividends 15.4Earnings available for common stock 149.7Total assets 3,385.6 432.3 158.7 3,976.6Construction and acquisition expenditures 244.8 26.2 1.2 272.2



116

2004Operating revenues $1,069.2 $316.0 $74.4 $1,459.6Depreciation and amortization 171.2 11.6 5.6 188.4Operating income 226.3 10.4 3.5 240.2Interest expense, net of AFUDC 53.9Interest income and other (1.1)Income tax expense 61.7Net income 125.7Preferred dividends 15.4Earnings available for common stock 110.3Total assets 3,319.8 403.9 145.4 3,869.1Construction and acquisition expenditures 304.7 21.2 1.2 327.1

2003Operating revenues $1,007.0 $294.5 $69.7 $1,371.2Depreciation and amortization 149.6 11.1 2.7 163.4Operating income 202.3 16.9 0.2 219.4Interest expense, net of AFUDC 48.7Interest income and other (1.3)Income tax expense 71.3Net income 100.7Preferred dividends 13.6Earnings available for common stock 87.1Total assets 3,073.4 367.1 180.5 3,621.0Construction and acquisition expenditures 516.5 19.9 1.6 538.0

(15) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)Summation of the individual quarters may not equal annual totals due to rounding.

2005 2004

March 31June

30Sep. 30

Dec.31

March 31June30

Sep. 30Dec.31

(in millions)



Net income 22.5 23.7 83.4 35.5 15.8 12.4 62.2 35.3



Earnings available for common stock 18.6 19.9 79.6 31.6 11.9 8.6 58.4 31.4

(16) ASSETS AND LIABILITIES HELD FOR SALEIn January 2006, IPL completed the sale of its interest in DAEC. Refer to Note 18 of Alliant Energy�s �Notes to Consolidated FinancialStatements� for further discussion of the DAEC sale. In addition, IPL has entered into an agreement to sell its Illinois electric and gas utilityproperties. IPL has applied the provisions of Statement of Financial Accounting Standards 144, �Accounting for the Impairment or Disposalof Long-lived Assets,� to these assets and liabilities, which are recorded as held for sale. The operating results of IPL�s interest in DAEC andits Illinois electric and gas utility properties were not reported as discontinued operations at Dec. 31, 2005. The components of assets andliabilities held for sale on IPL�s Consolidated Balance Sheets at Dec. 31 were as follows (in millions):

117



Electric plant in service $626.7 $602.3Gas plant in service 13.0 12.9Other plant in service 0.1 --Accumulated depreciation (412.6) (388.4)

Net plant 227.2 226.8Construction work in progress 3.6 11.0Other, less accumulated depreciation 40.2 48.0

Property, plant and equipment, net 271.0 285.8Current assets 13.0 12.1Nuclear decommissioning trust funds 187.7 170.0Other assets 17.9 18.8

Total assets held for sale 489.6 486.7Liabilities held for sale:

Current liabilities 1.2 --AROs 179.0 168.4Other long-term liabilities 52.1 44.4

Total liabilities held for sale 232.3 212.8


(21) RELATED PARTIESIPL and WPL are parties to a System Coordination and Operating Agreement. The agreement, which has been approved by the FederalEnergy Regulatory Commission (FERC), provides a contractual basis for coordinated planning, construction, operation and maintenance ofthe interconnected electric generation and transmission (IPL only) systems of IPL and WPL. In addition, the agreement allows theinterconnected system to be operated as a single entity with off-system capacity sales and purchases made to market excess system capabilityor to meet system capability deficiencies. Such sales and purchases are allocated among IPL and WPL based on procedures included in theagreement. The sales allocated to IPL were $76 million, $38 million and $35 million for 2005, 2004 and 2003, respectively. The purchasesallocated to IPL were $146 million, $106 million and $157 million for 2005, 2004 and 2003, respectively. The procedures were approved byboth FERC and all state regulatory bodies having jurisdiction over these sales. Under the agreement, IPL and WPL are fully reimbursed forany generation expense incurred to support the sale to an affiliate or to a non-affiliate. Any margins on sales to non-affiliates are distributed toIPL and WPL in proportion to each utility�s share of electric production at the time of the sale.



Pursuant to a service agreement, IPL receives various administrative and general services from an affiliate, Corporate Services. These servicesare billed to IPL at cost based on payroll and other expenses incurred by Corporate Services for the benefit of IPL. These costs totaled $157million, $180 million and $187 million for 2005, 2004 and 2003, respectively, and consisted primarily of employee compensation, benefitsand fees associated with various professional services. At Dec. 31, 2005 and 2004, IPL had a net intercompany payable to Corporate Servicesof $42 million and $36 million, respectively.

118


To the Board of Directors and Shareowners of Wisconsin Power and Light Company:

We have audited the accompanying consolidated balance sheets and statements of capitalization of Wisconsin Power and Light Company andsubsidiaries (the �Company�) as of December 31, 2005 and 2004, and the related consolidated statements of income, cash flows, and changesin common equity for each of the three years in the period ended December 31, 2005. Our audits also included the financial statementschedule listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of theCompany�s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on ouraudits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company�s internal control over financialreporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31,2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financialstatement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all materialrespects the information set forth therein.



119

WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF INCOME




(in millions)Operating revenues:Electric utility $1,073.9 $939.8 $910.1Gas utility 322.3 253.8 272.4Other 13.4 16.2 34.5

1,409.6 1,209.8 1,217.0

Operating expenses:Electric production fuel and purchased power 600.8 431.5 409.7Cost of gas sold 231.9 165.8 186.3Other operation and maintenance 259.1 282.1 292.6Depreciation and amortization 107.9 111.0 104.9Taxes other than income taxes 35.3 36.6 31.9

1,235.0 1,027.0 1,025.4


Interest expense and other:Interest expense 40.4 33.5 37.9Equity income from unconsolidated investments (26.3) (25.0) (20.7)Allowance for funds used during construction (3.3) (4.5) (4.0)Interest income and other (2.2) (1.2) (2.3)

8.6 2.8 10.9

Income before income taxes 166.0 180.0 180.7

Income taxes 60.9 66.3 65.8

Net income 105.1 113.7 114.9

Preferred dividend requirements 3.3 3.3 3.3

Earnings available for common stock $101.8 $110.4 $111.6


120

WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED BALANCE SHEETS




(in millions)

Property, plant and equipment:Electric plant in service $2,047.1 $1,905.4Gas plant in service 319.4 304.1Other plant in service 222.0 250.5Accumulated depreciation (1,054.6) (1,037.6)

Net plant 1,533.9 1,422.4Leased Sheboygan Falls Energy Facility, less accumulated amortization of $3.6 120.2 -Construction work in progress 53.0 62.2Other, less accumulated depreciation of $0.5 and $0.3 1.4 1.4

1,708.5 1,486.0

Current assets:Cash and temporary cash investments - 0.1Accounts receivable:

Customer, less allowance for doubtful accounts of $2.1 and $1.1 167.5 139.7Other, less allowance for doubtful accounts of $0.6 and $-- 40.0 30.5

Production fuel, at average cost 20.2 15.9Materials and supplies, at average cost 18.2 20.5Gas stored underground, at average cost 40.2 30.3Regulatory assets 32.7 21.1Prepaid gross receipts tax 31.8 33.0Assets held for sale 26.1 308.9Other 33.7 18.6

410.4 618.6

Investments:Investment in American Transmission Company LLC 152.4 141.5Other 44.6 95.9

197.0 237.4


351.7 314.1

Total assets $2,667.6 $2,656.1


121

WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED BALANCE SHEETS (Continued)





Capitalization (Refer to Consolidated Statements of Capitalization):Common stock - $5 par value - authorized 18,000,000 shares;13,236,601 shares outstanding $66.2 $66.2

Additional paid-in capital 525.8 525.7Retained earnings 473.7 461.7Accumulated other comprehensive loss (3.1) (2.7)


Cumulative preferred stock 60.0 60.0Long-term debt, net (excluding current portion) 364.3 364.2

1,486.9 1,475.1

Current liabilities:Current maturities - 88.0Variable rate demand bonds 39.1 39.1Commercial paper 93.5 47.0Accounts payable 122.3 91.0Accounts payable to associated companies 29.7 20.3Regulatory liabilities 86.2 23.8Liabilities held for sale 2.2 196.1Other 51.5 39.4

424.5 544.7

Other long-term liabilities and deferred credits:Deferred income taxes 224.8 232.6Deferred investment tax credits 17.8 19.9Regulatory liabilities 191.9 221.5Capital lease obligations - Sheboygan Falls Energy Facility 120.8 -Pension and other benefit obligations 101.8 85.7Other 99.1 76.6

756.2 636.3



122



WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)Cash flows from operating activities:Net income $105.1 $113.7 $114.9Adjustments to reconcile net income to net cashflows from operating activities:Depreciation and amortization 107.9 111.0 104.9Other amortizations 35.7 41.4 51.3Deferred tax expense (benefit) and investment tax credits (3.5) 8.5 21.8Equity income from unconsolidated investments (26.3) (25.0) (20.7)Distributions from equity method investments 24.7 20.5 14.0Other (1.0) (3.7) (2.3)

Other changes in assets and liabilities:Accounts receivable (37.3) (16.9) (10.0)Sale of accounts receivable -- (50.0) (66.0)Income tax refunds receivable -- 16.8 (16.8)Regulatory assets (91.5) (67.0) (40.3)Accounts payable 36.4 8.6 (2.6)Regulatory liabilities 23.2 (18.7) (14.7)Benefit obligations and other 3.2 60.1 5.0


Cash flows used for investing activities:Utility construction and acquisition expenditures (185.3) (211.5) (151.6)Proceeds from asset sales 80.1 -- 21.3Purchases of securities within nuclear decommissioning trusts (6.1) (209.5) (168.2)Sales of securities within nuclear decommissioning trusts 83.4 357.7 174.9Changes in restricted cash within nuclear decommissioning trusts (17.3) (151.1) (9.6)Other 2.3 0.1 24.8


Cash flows used for financing activities:Common stock dividends (89.8) (89.0) (70.6)Preferred stock dividends (3.3) (3.3) (3.3)Capital contribution from parent -- -- 200.0Proceeds from issuance of long-term debt -- 100.0 --Reductions in long-term debt (88.0) (62.0) (70.0)Net change in commercial paper 46.5 47.0 (60.0)Other 0.8 (4.7) (7.7)

Net cash flows used for financing activities (133.8) (12.0) (11.6)

Net increase (decrease) in cash and temporary cash investments (0.1) (27.0) 18.5

Cash and temporary cash investments at beginning of period 0.1 27.1 8.6



Cash and temporary cash investments at end of period $- $0.1 $27.1

Supplemental cash flows information:Cash paid during the period for:Interest $41.9 $31.3 $39.6

Income taxes, net of refunds $64.1 $40.4 $84.3

Noncash investing and financing activities:Capital lease obligations incurred $123.8 $- $-


123

WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CAPITALIZATION

December 31,2005 2004

(dollars in millions, exceptper share amounts)


Cumulative preferred stock:Cumulative, without par value, not mandatorily redeemable - authorized 3,750,000shares, maximum aggregate stated value $150, redeemable any time:$100 stated value - 4.50% series, 99,970 shares outstanding 10.0 10.0$100 stated value - 4.80% series, 74,912 shares outstanding 7.5 7.5$100 stated value - 4.96% series, 64,979 shares outstanding 6.5 6.5$100 stated value - 4.40% series, 29,957 shares outstanding 3.0 3.0$100 stated value - 4.76% series, 29,947 shares outstanding 3.0 3.0$100 stated value - 6.20% series, 150,000 shares outstanding 15.0 15.0$25 stated value - 6.50% series, 599,460 shares outstanding 15.0 15.0

60.0 60.0

Long-term debt, net:First Mortgage Bonds:1984 Series A, variable rate (3.8% at Dec. 31, 2005), due 2014 8.5 8.51988 Series A, variable rate (3.7% at Dec. 31, 2005), due 2015 14.6 14.61991 Series A, variable rate (3.88% at Dec. 31, 2005), due 2015 16.0 16.01992 Series Y, 7.6%, matured in 2005 - 72.01991 Series B, variable rate (2.5% at Dec. 31, 2004), matured in 2005 - 16.0

39.1 127.1



Other:Debentures, 7%, due 2007 105.0 105.0Debentures, 5.7%, due 2008 60.0 60.0Debentures, 7.625%, due 2010 100.0 100.0Debentures, 6.25%, due 2034 100.0 100.0

365.0 365.0

Total, gross 404.1 492.1Less:Current maturities - (88.0)Variable rate demand bonds (39.1) (39.1)Unamortized debt discount, net (0.7) (0.8)

Total long-term debt, net 364.3 364.2



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WISCONSIN POWER AND LIGHT COMPANYCONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY

AccumulatedAdditional Other Total

Common Paid-In Retained Comprehensive CommonStock Capital Earnings Loss Equity

(in millions)2003:Beginning balance (a) $66.2 $325.6 $399.3 ($24.1) $767.0

Earnings available for common stock 111.6 111.6Minimum pension liability adjustment,net of tax of $2.8 4.2 4.2

Unrealized holding losses on derivatives,net of tax of ($3.5) (6.0) (6.0)

Less: reclassification adjustment for lossesincluded in earnings available for commonstock, net of tax of ($3.8) (5.6) (5.6)

Net unrealized losses on qualifying derivatives (0.4) (0.4)

Total comprehensive income 115.4Common stock dividends (70.6) (70.6)Capital contribution from parent 200.0 200.0



Ending balance 66.2 525.6 440.3 (20.3) 1,011.8

2004:Earnings available for common stock 110.4 110.4Minimum pension liability adjustment,net of tax of $11.7 17.6 17.6


Ending balance 66.2 525.7 461.7 (2.7) 1,050.9

2005:Earnings available for common stock 101.8 101.8Minimum pension liability adjustment,net of tax of ($0.3) (0.4) (0.4)


Ending balance $66.2 $525.8 $473.7 ($3.1) $1,062.6

(a)Accumulated other comprehensive loss at Jan. 1, 2003 consisted of ($24.5) of minimum pension liability adjustments and $0.4 of netunrealized gains on qualifying derivatives.


125

WISCONSIN POWER AND LIGHT COMPANYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Except as modified below, the Alliant Energy Corporation (Alliant Energy) �Notes to Consolidated Financial Statements� are incorporated byreference insofar as they relate to Wisconsin Power and Light Company (WPL) and incorporate the disclosures relating to WPL contained inthe following notes of the Alliant Energy �Notes to Consolidated Financial Statements�:

Summary of Significant Accounting Policies Note 1(a) to 1(d), 1(f) to 1(j), 1(l), 1(n), 1(o), 1(q), 1(r), 1(t)Utility Rate Matters Note 2Leases Note 3(a)Sales of Accounts Receivable Note 4Income Taxes Note 5 4th paragraphBenefit Plans Note 6(a) 1st, 2nd, 6th, 8th, 10th, 11th, 14th, 15th, 17th and 18th paragraphsCommon and Preferred Stock Note 7(a) 2nd and 4th paragraphs and 7(b)Debt Note 8(a) and 8(b) 1st, 2nd, 7th and 9th paragraphsInvestments and Estimated Fair Value of

Financial Instruments Note 9 1st, 2nd, 3rd and 10th paragraphs



Derivative Financial Instruments Note 10(a) 1st, 2nd and 5th paragraphs and 10(b)Commitments and Contingencies Note 11(b), 11(c), 11(d) 1st and 3rd paragraphs, 11(e), 11(f)Jointly-Owned Electric Utility Plant Note 12Sale of WPL�s Interest in Kewaunee Nuclear

Power Plant (Kewaunee) Note 17Asset Retirement Obligations (AROs) Note 19Variable Interest Entities Note 20Related Parties Note 21

The notes that follow herein set forth additional specific information for WPL and are numbered to be consistent with the Alliant Energy�Notes to Consolidated Financial Statements.�

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) General - The consolidated financial statements include the accounts of WPL and its principal consolidated subsidiaries WPL TranscoLLC and South Beloit Water, Gas and Electric Company (South Beloit). WPL is a direct subsidiary of Alliant Energy and is engagedprincipally in the generation, distribution and sale of electric energy; the purchase, distribution, transportation and sale of natural gas; andvarious other energy-related services. WPL�s primary service territories are located in south and central Wisconsin.

(3) LEASES(a) Operating Leases - WPL has entered into various agreements related to property, plant and equipment rights that are accounted for asoperating leases. WPL�s most significant operating leases relate to certain purchased power agreements. These purchased power agreementscontain fixed rental payments related to capacity and transmission rights and contingent rental payments related to the energy portion (actualmegawatt-hours (MWhs)) of the respective agreements. Rental expenses associated with WPL�s operating leases were as follows (inmillions):

2005 2004 2003Operating lease rental expenses (excluding contingent rentals) $91

$63$25

Contingent rentals related to certain purchased power agreements 2833 26

Other contingent rentals -- 1 --$119 $97 $51

At Dec. 31, 2005, WPL�s future minimum operating lease payments, excluding contingent rentals, were as follows (in millions):2006 2007 2008 2009 2010 Thereafter Total

Certain purchased power agreements $77 $78 $71 $62 $56 $131 $475Synthetic leases 8 7 3 3 5 8 34Other 1 1 1 1 1 2 7

$86 $86 $75 $66 $62 $141 $516

126

The synthetic leases in the above table relate to the financing of utility railcars and a utility radio dispatch system. The entities that lease theseassets to WPL do not meet the consolidation requirements per Financial Accounting Standards Board Interpretation No. 46R, �Consolidationof Variable Interest Entities,� and are not included on WPL�s Consolidated Balance Sheets. WPL has guaranteed the residual value of itssynthetic leases which total $8 million in the aggregate. The guarantees extend through the maturity of each respective underlying lease withremaining terms up to 10 years. Residual value guarantee amounts have been included in the above table.



(b) Capital Lease - In the second quarter of 2005, WPL entered into a 20-year agreement with Alliant Energy Resources, Inc.�s (Resources�)Non-regulated Generation business to lease the Sheboygan Falls Energy Facility (SFEF), with an option for two lease renewal periodsthereafter. The lease became effective in June 2005 when SFEF began commercial operations. WPL is responsible for the operation of SFEFand has exclusive rights to its output. In May 2005, the Public Service Commission of Wisconsin (PSCW) approved this affiliated leaseagreement with initial monthly payments of approximately $1.3 million. The lease payments were based on a 50% debt to capital ratio, areturn on equity of 10.9%, a cost of debt based on the cost of senior notes issued by Resources� Non-regulated Generation business in June2005 and certain costs incurred to construct the facility. In accordance with its order approving the lease agreement, the PSCW will review thecapital structure, return on equity and cost of debt every five years from the date of the final decision. The capital lease is amortized using thestraight-line method over the 20-year lease term. WPL�s 2005/2006 retail rate case that became effective in July 2005 includes recovery of themonthly SFEF lease payment amounts from WPL�s customers. In 2005, SFEF lease expenses were $11.3 million ($7.7 million included in�Interest expense� and $3.6 million included in �Depreciation and amortization,� respectively, in WPL�s Consolidated Statements ofIncome). At Dec. 31, 2005, WPL�s estimated future minimum capital lease payments for SFEF were as follows (in millions):

Less: Present valueamount of net Grossrepre- minimum assets Accumulated

There- senting capital lease under lease amortization2006 2007 2008 2009 2010 after Total interest payments at 12-31-05 at 12-31-05

$15 $15 $15 $15 $15 $218 $293 $170 $123 $124 $4

(5) INCOME TAXESThe components of income taxes for WPL were as follows (in millions):

2005 2004 2003

Current tax expense:

Federal$53.0

$45.2 $29.0

State 13.4 13.3 15.7Deferred tax expense (benefit):

Federal (3.5) 9.7 22.8State 1.4 0.4 0.6

Amortization of investment tax credits (1.5) (1.6) (1.6)Research and development tax credits (1.9) (0.7) (0.7)

$60.9 $66.3 $65.8

Alliant Energy files a consolidated federal income tax return. Under the terms of an agreement between Alliant Energy and its subsidiaries, thesubsidiaries calculate their respective federal income tax provisions and make payments to or receive payments from Alliant Energy as if theywere separate taxable entities.

In 2005, 2004 and 2003, WPL realized net benefits of $1.5 million, $1.2 million and $2.9 million, respectively, related to state apportionmentand allocation of parent tax benefits.

127

The overall effective income tax rates shown in the following table were computed by dividing total income tax expense by income beforeincome taxes.



2005 20042003

Statutory federal income tax rate 35.0%35.0% 35.0%

State income taxes, net of federal benefits 7.5 6.2 5.8Adjustment of prior period taxes (0.7) (1.5) (0.8)Amortization of excess deferred taxes (0.9) (0.5) (0.5)Amortization of investment tax credits (0.9) (0.9) (0.9)Research and development tax credits (1.2) (0.4) (0.3)Other items, net (2.1) (1.1) (1.9)

Overall effective income tax rate 36.7% 36.8% 36.4%


2005 2004Deferred Deferred Tax Deferred Deferred Tax

Tax Assets Liabilities Net Tax Assets Liabilities NetProperty ($12.0) $214.2 $202.2 ($13.2) $222.7 $209.5Decommissioning -- -- -- (23.5) -- (23.5)Investment in American -- 43.7 43.7 -- 14.0 14.0

Transmission Co. LLC (ATC)Regulatory liability -

decommissioning (28.3) -- (28.3) -- -- --Other (30.5) 30.5 -- (8.0) 32.6 24.6

($70.8) $288.4 $217.6 ($44.7) $269.3 $224.6

2005 2004Other current assets ($7.2) ($8.0)Deferred income taxes 224.8 232.6

Total deferred tax (assets) and liabilities $217.6 $224.6

(6) BENEFIT PLANS(a) Pension Plans and Other Postretirement Benefits - Substantially all of WPL�s employees are covered by several non-contributorydefined benefit pension plans. The assumptions at the measurement date of Sep. 30 for WPL�s qualified pension benefits and otherpostretirement benefits were equal to the assumptions used for Alliant Energy�s pension benefits and other postretirement benefits,respectively, except for the rate of compensation increase. WPL�s rates of compensation increase for its qualified pension benefits and itsother postretirement benefits were 3.5% for 2005, 2004 and 2003.

The components of WPL�s qualified pension benefits and other postretirement benefits costs were as follows (in millions):

Qualified Pension Benefits Other Postretirement Benefits2005 2004 2003 2005 2004 2003

Service cost $5.3 $5.0 $4.0 $4.4 $4.0 $3.4Interest cost 12.2 11.2 10.6 6.3 5.4 5.2Expected return on plan assets (17.0) (15.9) (13.5) (1.8) (1.7) (1.4)Amortization of:

Transition obligation -- -- -- 1.1 1.1 1.1Prior service cost 0.8 0.6 0.4 -- -- --



Actuarial loss 3.43.0 3.5

2.4 1.4 0.8

Special termination benefits ---- --

1.1 -- --

$4.7 $3.9 $5.0 $13.5 $10.2 $9.1

In the above table, the pension benefits costs represent only those respective costs for bargaining unit employees of WPL covered under thebargaining unit pension plan that is sponsored by WPL. The other postretirement benefits costs represent costs for all WPL employees. AlliantEnergy Corporate Services, Inc. (Corporate Services) provides services to WPL. The following table includes qualified pension benefits costsfor WPL�s non-bargaining employees who are participants in other

128

Alliant Energy plans, and the allocated pension and other postretirement benefits costs associated with Corporate Services for WPL as follows(in millions):


Non-bargaining WPL employeesparticipating in other plans $0.8 $0.5 $1.9 N/A N/A N/A

Allocated Corporate Services costs 2.2 2.1 2.0 $2.9 $1.6 $0.9


1% Increase 1% DecreaseEffect on total of service and interest cost components $1.2 ($1.1)Effect on postretirement benefit obligation $8.5 ($7.8)

The benefit obligations and assets associated with WPL�s non-bargaining employees who are participants in other Alliant Energy plans arereported in Alliant Energy�s Consolidated Financial Statements and are not reported in the following tables. A reconciliation of the fundedstatus of WPL�s plans to the amounts recognized on WPL�s Consolidated Balance Sheets at Dec. 31 was as follows (in millions):



2005 2004 2005 2004Change in projected benefit obligation:

Net projected benefit obligation at beginning of year $202.5 $181.0 $105.3 $93.1Service cost 5.3 5.0 4.4 4.0Interest cost 12.2 11.2 6.3 5.4Plan participants� contributions -- -- 1.8 1.6Plan amendments -- 5.7 -- --Actuarial loss (gain) 24.9 6.9 (12.7) 7.7Special termination benefits -- -- 1.1 --Gross benefits paid (7.6) (7.3) (7.9) (6.5)

Net projected benefit obligation at end of year 237.3 202.5 98.3 105.3

Change in plan assets:



Fair value of plan assets at beginning of year 192.9 175.0 20.7 19.5Actual return on plan assets 22.4 20.2 1.9 2.1Employer contributions 7.0 5.0 4.1 4.0Plan participants� contributions -- -- 1.8 1.6Gross benefits paid (7.6) (7.3) (7.9) (6.5)

Fair value of plan assets at end of year 214.7 192.9 20.6 20.7

Funded status at end of year (22.6) (9.6) (77.7) (84.6)Unrecognized net actuarial loss 78.1 62.0 21.3 36.4Unrecognized prior service cost 7.3 8.1 (0.1) (0.1)Unrecognized net transition obligation -- -- 8.0 9.2



Prepaid benefit cost $62.8 $60.5 $1.8 $1.6Accrued benefit cost -- -- (50.3) (40.7)

Net amount recognized at measurement date 62.8 60.5 (48.5) (39.1)

Contributions paid after Sep. 30 and prior to Dec. 31 -- -- 1.7 0.6


129

At Dec. 31, 2005 and 2004, Corporate Services allocated to WPL a minimum pension liability of $51 million and $44 million, respectively.Included in the following table are WPL�s accumulated benefit obligations, amounts applicable to qualified pension and other postretirementbenefits with accumulated benefit obligations in excess of plan assets, as well as qualified pension plans with projected benefit obligations inexcess of plan assets as of the measurement date of Sep. 30 (in millions):




of plan assets:

Accumulated benefit obligations-

--

-96.9 103.6

Fair value of plan assets-

--

-17.1 17.3



Postretirement benefit plans are funded via specific assets within certain retirement plans (401(h) assets) as well as a Voluntary Employees�Beneficiary Association (VEBA) trust. The asset allocation of the 401(h) assets mirror the qualified pension plan assets and the assetallocation of the VEBA trust are reflected in the following table under �Other Postretirement Benefit Plans.� The asset allocation for WPL�squalified pension and other postretirement benefit plans at Sep. 30, 2005 and 2004, and the qualified pension plan target allocation for 2005were as follows:



Other PostretirementQualified Pension Plan Benefit Plans

Target Percentage of Plan Percentage of PlanAllocation Assets at Sep. 30, Assets at Sep. 30,


100% 100% 100% 100%

WPL estimates that funding for the qualified pension plan for the bargaining unit and other postretirement benefits plans during 2006 will be$0 and $6 million, respectively.



$13.7 $14.2 $14.9 $15.7 $16.8 $110.2

Alliant Energy sponsors several non-qualified pension plans that cover certain current and former key employees. The pension expenseallocated to WPL for these plans was $1.9 million, $1.8 million and $1.7 million for 2005, 2004, and 2003, respectively.

(8) DEBT(b) Long-Term Debt - WPL�s debt maturities for 2006 to 2010 are $0, $105 million, $60 million, $0 and $100 million, respectively. Thecarrying value of WPL�s long-term debt (including current maturities and variable rate demand bonds) at Dec. 31, 2005 and 2004 was $403million and $491 million, respectively. The fair value, based upon the market yield of similar securities and quoted market prices, at Dec. 31,2005 and 2004 was $425 million and $532 million, respectively. WPL�s unamortized debt issuance costs recorded in �Deferred charges andother� on WPL�s Consolidated Balance Sheets were $3.0 million and $4.0 million at Dec. 31, 2005 and 2004, respectively.

130

(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTSUnconsolidated Equity Investments - At Dec. 31, 2005 and 2004, WPL had $162 million and $154 million of investments in equity methodinvestees, respectively, consisting of a 21% ownership interest in ATC (carrying value of $152 million and $141 million at Dec. 31, 2005 and2004, respectively) and a 50% ownership interest in Wisconsin River Power Company (WRPC) (carrying value of $10 million and $13million at Dec. 31, 2005 and 2004), respectively. Summary financial information from the financial statements of WPL�s unconsolidatedequity investments in ATC and WRPC is as follows (in millions):

2005 2004 2003Operating revenues $303 $270 $232Operating income 131 107 88Net income 106 91 72

As of Dec. 31:Current assets 34 39Non-current assets 1,536 1,177Current liabilities 142 195Non-current liabilities 757 458



(11) COMMITMENTS AND CONTINGENCIES(a) Construction and Acquisition Expenditures - WPL has made certain commitments in connection with its 2006 capital expenditures.

(b) Purchase Obligations - Based on the System Coordination and Operating Agreement, Alliant Energy annually allocates purchased powercontracts to Interstate Power and Light Company (IPL) and WPL, based on various factors such as resource mix, load growth and resourceavailability. The amounts in the following table reflect these allocated contracts. However, for 2006 and 2007, system-wide purchased powercontracts of $218.7 million (3.3 million MWhs) and $62.9 million (1.3 million MWhs), respectively, have not yet been directly assigned toIPL and WPL since the specific needs of each utility are not yet known. Refer to Note 21 for additional information. WPL enters into coaltransportation contracts that are directly assigned to its specific generating stations, the amounts of which are included in the following table.In addition, Corporate Services entered into system-wide coal contracts on behalf of IPL and WPL for 2006 to 2010 of $70.9 million (10.1million tons), $55.7 million (7.6 million tons), $35.8 million (5.0 million tons), $18.5 million (2.5 million tons) and $4.8 million (0.6 milliontons), respectively, to allow flexibility for the changing needs of the quantity of coal consumed by each. Coal contract quantities are allocatedto specific IPL or WPL generating stations at or before the time of delivery based on various factors including projected heat inputrequirements, combustion compatibility and efficiency. These system-wide coal contracts have not yet been directly assigned to IPL and WPLsince the specific needs of each utility are not yet known. At Dec. 31, 2005, WPL�s minimum commitments were as follows (dollars anddekatherms (Dths) in millions; MWhs and tons in thousands):


2006 $80.11,801

$9.0--

$196.918

2007 84.1 2,001 9.0 -- 24.8 --2008 75.7 1,830 6.5 -- 20.6 --2009 87.4

1,7716.5

--15.3

--

2010 86.2 1,763 6.5 -- 11.0 --Thereafter 224.9 5,797 25.8 -- 10.5 --

$638.4 14,963 $63.3 -- $279.1 18

The amounts related to WPL�s Kewaunee purchased power agreement are included in the above table. Also, at Dec. 31, 2005, WPL�s otherpurchase obligations, which represent individual commitments incurred during the normal course of business which exceeded $1.0 million atDec. 31, 2005, were $3 million, $1 million and $1 million for 2006, 2007 and 2008, respectively. This excludes lease obligations which areincluded in Note 3.

131

(13) SEGMENTS OF BUSINESSWPL is a utility serving customers in Wisconsin and Illinois and includes three segments: a) electric operations; b) gas operations; and c)other, which includes various other energy-related products and services and the unallocated portions of the utility business. Various line itemsin the following tables are not allocated to the electric and gas segments for management reporting purposes and therefore are included in�Total.� In 2005, 2004 and 2003, gas revenues included $51 million, $20 million and $45 million, respectively, for sales to the electricsegment. All other intersegment revenues were not material to WPL�s operations and there was no single customer whose revenues were 10%or more of WPL�s consolidated revenues. Certain financial information relating to WPL�s significant business segments was as follows (inmillions):

Electric Gas Other Total2005Operating revenues $1,073.9 $322.3 $13.4 $1,409.6



Depreciation and amortization 92.7 14.6 0.6 107.9Operating income (loss) 146.5 33.4 (5.3) 174.6Interest expense, net of allowance for funds used

during construction (AFUDC) 37.1Equity income from unconsolidated investments (26.3)Interest income and other (2.2)Income tax expense 60.9Net income 105.1Preferred dividends 3.3Earnings available for common stock 101.8Total assets 2,070.2 380.2 217.2 2,667.6Investments in equity method subsidiaries 162.5 -- -- 162.5Construction and acquisition expenditures 164.5 20.2 0.6 185.3

2004Operating revenues $939.8 $253.8 $16.2 $1,209.8Depreciation and amortization 95.7 14.8 0.5 111.0Operating income (loss) 164.9 24.8 (6.9) 182.8Interest expense, net of AFUDC 29.0Equity income from unconsolidated investments (25.0)Interest income and other (1.2)Income tax expense 66.3Net income 113.7Preferred dividends 3.3Earnings available for common stock 110.4Total assets 2,097.5 333.3 225.3 2,656.1Investments in equity method subsidiaries 154.3 -- -- 154.3Construction and acquisition expenditures 189.1 20.2 2.2 211.5

2003Operating revenues $910.1 $272.4 $34.5 $1,217.0Depreciation and amortization 89.2 14.6 1.1 104.9Operating income 163.8 25.5 2.3 191.6Interest expense, net of AFUDC 33.9Equity income from unconsolidated investments (20.7)Interest income and other (2.3)Income tax expense 65.8Net income 114.9Preferred dividends 3.3Earnings available for common stock 111.6Total assets 1,950.5 306.2 212.6 2,469.3Investments in equity method subsidiaries 133.3 -- -- 133.3Construction and acquisition expenditures 133.0 17.4 1.2 151.6

132

(15) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)



Summation of the individual quarters may not equal annual totals due to rounding.

2005 2004

March 31June

30Sep.30

Dec.31

March 31June30

Sep.30

Dec.31

(in millions)



Net income 23.9 15.6 34.4 31.2 22.3 31.2 33.6 26.7

Earnings available for common stock 23.1 14.7 33.6 30.4 21.5 30.3 32.8 25.8

(16) ASSETS AND LIABILITIES HELD FOR SALEIn July 2005, WPL completed the sale of its interest in Kewaunee and its water utility in Ripon, Wisconsin. Refer to Note 17 of AlliantEnergy�s �Notes to Consolidated Financial Statements� for further discussion of the Kewaunee sale. In addition, WPL has entered into anagreement to sell its Illinois utility subsidiary, South Beloit. WPL has applied the provisions of Statement of Financial Accounting Standards144, �Accounting for the Impairment or Disposal of Long-lived Assets,� to these assets and liabilities, which are recorded as held for sale.The operating results of WPL�s interest in Kewaunee, Ripon and South Beloit were not reported as discontinued operations at Dec. 31, 2005.The components of assets and liabilities held for sale on WPL�s Consolidated Balance Sheets at Dec. 31 were as follows (in millions):



Electric plant in service $20.3 $223.1Gas plant in service 12.7 12.3Other plant in service 6.7 13.6Accumulated depreciation (14.2) (161.8)

Net plant 25.5 87.2Construction work in progress 0.6 15.7Other, less accumulated depreciation -- 17.0

Property, plant and equipment, net 26.1 119.9Current assets -- 3.8Nuclear decommissioning trust funds -- 170.9Other assets -- 14.3

Total assets held for sale 26.1 308.9Liabilities held for sale:

Long-term liabilities (primarily AROs) 2.2 196.1


(21) RELATED PARTIESIPL and WPL are parties to a System Coordination and Operating Agreement. The agreement, which has been approved by the FederalEnergy Regulatory Commission (FERC), provides a contractual basis for coordinated planning, construction, operation and maintenance ofthe interconnected electric generation and transmission (IPL only) systems of IPL and WPL. In addition, the agreement allows the



interconnected system to be operated as a single entity with off-system capacity sales and purchases made to market excess system capabilityor to meet system capability deficiencies. Such sales and purchases are allocated among IPL and WPL based on procedures included in theagreement. The sales allocated to WPL were $40 million, $25 million and $42 million for 2005, 2004 and 2003, respectively. The purchasesallocated to WPL were $466 million, $279 million and $229 million for 2005, 2004 and 2003, respectively. The procedures were approved byboth FERC and all state regulatory bodies having jurisdiction over these sales. Under the agreement, IPL and WPL are fully reimbursed forany generation expense incurred to support the sale to an affiliate or to a non-affiliate. Any margins on sales to non-affiliates are distributed toIPL and WPL in proportion to each utility�s share of electric production at the time of the sale.

Pursuant to a service agreement, WPL receives various administrative and general services from an affiliate, Corporate Services. Theseservices are billed to WPL at cost based on payroll and other expenses incurred by Corporate Services for the benefit of WPL. These coststotaled $113 million, $129 million and $125 million for 2005, 2004 and 2003, respectively, and consisted primarily of employeecompensation, benefits and fees associated with various professional services. At Dec. 31, 2005 and 2004, WPL had a net intercompanypayable to Corporate Services of $45 million and $31 million, respectively.

In 2004, Resources� Non-regulated Generation business billed WPL $7 million related to the construction of SFEF, which WPL leases fromResources. Refer to Note 3(b) for discussion of WPL�s capital lease related to SFEF.

133

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Alliant Energy�s, IPL�s and WPL�s management evaluated, with the participation of each of Alliant Energy�s, IPL�s and WPL�s ChiefExecutive Officer (CEO), Chief Financial Officer (CFO) and Disclosure Committee, the effectiveness of the design and operation of AlliantEnergy�s, IPL�s and WPL�s disclosure controls and procedures as of the end of the quarter ended Dec. 31, 2005 pursuant to the requirementsof the Securities Exchange Act of 1934, as amended. Based on their evaluation, the CEO and the CFO concluded that Alliant Energy�s, IPL�sand WPL�s disclosure controls and procedures were effective as of the end of the quarter ended Dec. 31, 2005.

The information required by Item 9A relating to �Management�s Annual Report on Internal Control Over Financial Reporting� and �Reportof Independent Registered Public Accounting Firm� is incorporated herein by reference to the relevant information in Item 8 FinancialStatements and Supplementary Data. There was no change in Alliant Energy�s, IPL�s and WPL�s internal control over financial reportingthat occurred during the quarter ended Dec. 31, 2005 that has materially affected, or is reasonably likely to materially affect, Alliant Energy�s,IPL�s or WPL�s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS



ALLIANT ENERGY AND IPLThe directors of Alliant Energy and IPL are the same and therefore the information required by Item 10 relating to directors and nominees forelection of directors is the same for both registrants. The information required by Item 10 relating to directors and nominees for election ofdirectors at the 2006 Annual Meeting of Shareowners is incorporated herein by reference to the relevant information under the caption�Election of Directors� in Alliant Energy�s Proxy Statement for the 2006 Annual Meeting of Shareowners (the 2006 Alliant Energy ProxyStatement), which will be filed with the SEC within 120 days after the end of Alliant Energy�s and IPL�s fiscal years. The informationrequired by Item 10 relating to the timely filing of reports under Section 16 of the Securities Exchange Act of 1934 is incorporated herein byreference to the relevant information under the caption �Section 16(a) Beneficial Ownership Reporting Compliance� in the 2006 AlliantEnergy Proxy Statement. Information regarding executive officers of Alliant Energy and IPL may be found in Part I of this report under thecaption �Executive Officers of the Registrants.� The information required by Item 10 relating to audit committees and audit committeefinancial experts is incorporated herein by reference to the relevant information under the caption �Meetings and Committees of the Board� inthe 2006 Alliant Energy Proxy Statement. The code of ethics of Alliant Energy and IPL are the same. The information required by Item 10relating to Alliant Energy�s and IPL�s code of ethics is incorporated herein by reference to the relevant information under the caption�Corporate Governance� in the 2006 Alliant Energy Proxy Statement.

WPLThe information required by Item 10 relating to directors and nominees for election of directors at the 2006 Annual Meeting of Shareowners isincorporated herein by reference to the relevant information under the caption �Election of Directors� in WPL�s Proxy Statement for the 2006Annual Meeting of Shareowners (the 2006 WPL Proxy Statement), which will be filed with the SEC within 120 days after the end of WPL�sfiscal year. The information required by Item 10 relating to the timely filing of reports under Section 16 of the Securities Exchange Act of1934 is incorporated herein by reference to the relevant information under the caption �Section 16(a) Beneficial Ownership ReportingCompliance� in the 2006 WPL Proxy Statement. Information regarding executive officers of WPL may be found in Part I of this report underthe caption �Executive Officers of the Registrants.� The information required by Item 10 relating to audit committees and audit committeefinancial experts is incorporated herein by reference to the relevant information under the caption �Meetings and Committees of the Board� inthe 2006 WPL Proxy Statement. The code of ethics of Alliant Energy and WPL are the same therefore the information required by Item 10relating to WPL�s code of ethics is incorporated herein by reference to the relevant information under the caption �Corporate Governance� inthe 2006 Alliant Energy Proxy Statement.

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ITEM 11. EXECUTIVE COMPENSATION

ALLIANT ENERGY, IPL AND WPLThe directors and executive officers for Alliant Energy, IPL and WPL for which compensation information must be included are the same.Therefore, the information required by Item 11 for each of Alliant Energy, IPL and WPL is incorporated herein by reference to the relevantinformation under the captions �Compensation of Directors,� �Compensation of Executive Officers,� �Stock Options,� �Long-TermIncentive Awards,� �Certain Agreements� and �Retirement and Employee Benefit Plans� in the 2006 Alliant Energy Proxy Statement, whichwill be filed with the SEC within 120 days after the end of Alliant Energy�s, IPL�s and WPL�s fiscal years.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS

ALLIANT ENERGYThe information required by Item 12 is incorporated herein by reference to the relevant information under the captions �Amended andRestated 2002 Equity Incentive Plan Proposal� and �Ownership of Voting Securities� in the 2006 Alliant Energy Proxy Statement, which willbe filed with the SEC within 120 days after the end of Alliant Energy�s fiscal year.

IPL



To IPL�s knowledge, no shareowner beneficially owned 5% or more of IPL�s 8.375% or 7.10% Cumulative Preferred Stock as of Dec. 31,2005. None of the directors or executive officers of IPL own any shares of IPL�s 8.375% or 7.10% Cumulative Preferred Stock.

WPLThe information required by Item 12 is incorporated herein by reference to the relevant information under the caption �Ownership of VotingSecurities� in the 2006 WPL Proxy Statement, which will be filed with the SEC within 120 days after the end of WPL�s fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

ALLIANT ENERGYThe information required by Item 14 is incorporated herein by reference to the relevant information under the caption �Report of the AuditCommittee� in the 2006 Alliant Energy Proxy Statement, which will be filed with the SEC within 120 days after the end of Alliant Energy�sfiscal year.

IPLIPL�s Audit Committee of the Board of Directors (Committee) has adopted a policy that requires advance approval of all audit, audit-related,tax and other permitted services performed by the independent auditor. The policy provides for pre-approval by the Committee of specificallydefined audit and non-audit services after the Committee is provided with the appropriate level of details regarding the specific services to beprovided. The policy does not permit delegation of the Committee�s authority to management. In the event the need for specific servicesarises between Committee meetings, the Committee has delegated to the Chairperson of the Committee authority to approve permittedservices provided that the Chairperson reports any decisions to the Committee at its next scheduled meeting. The principal accounting fees andservices billed to Alliant Energy by its independent auditors, all of which were approved in advance by the Committee, directly related andallocated to IPL for 2005 and 2004 were as follows (in thousands):

135

2005 2004Fees % of Total Fees % of Total

Audit Fees $1,234 85% $1,462 63%Audit-related Fees 71 5% 527 23%Tax Fees 111 8% 311 13%All Other Fees 35 2% 33 1%

$1,451 100% $2,333 100%

Audit-related fees consisted of the fees billed for Sarbanes-Oxley Section 404 planning, employee benefits plan audits and attest services notrequired by statute or regulations. Tax fees consisted of the fees billed for professional services rendered for tax compliance, tax advice andtax planning, including all services performed by the professional staff in the independent auditors� tax division, except those rendered inconnection with the audit. All other fees primarily consisted of license fees for tax and accounting research software products. The Committeedoes not consider the provision of non-audit services by the independent auditors described above to be incompatible with maintaining auditorindependence.

WPLThe information required by Item 14 is incorporated herein by reference to the relevant information under the caption �Report of the AuditCommittee� in the 2006 WPL Proxy Statement, which will be filed with the SEC within 120 days after the end of WPL�s fiscal year.



PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1) Consolidated Financial Statements - Refer to �Index to Financial Statements� in Item 8 Financial Statements and Supplementary Data.

(2) Financial Statement Schedules - Schedule II. Valuation and Qualifying Accounts and Reserves

NOTE: All other schedules are omitted because they are not applicable or not required, or because that required information is showneither in the consolidated financial statements or in the notes thereto.

(3) Exhibits Required by SEC Regulation S-K - The following Exhibits are filed herewith or incorporated herein by reference.

3.1 Restated Articles of Incorporation of Alliant Energy, as amended (incorporated by reference to Exhibit 4.1 to AlliantEnergy�s Registration Statement on Form S-8, dated July 26, 2004 (Registration No. 333-117654)

3.2 Bylaws of Alliant Energy, as amended, effective as of Jan. 30, 2001 (incorporated by reference to Exhibit 3.2 to AlliantEnergy�s Form 10-K for the year 2000 (File No. 1-9894))

3.3 Restated Articles of Incorporation of WPL, as amended (incorporated by reference to Exhibit 3.1 to WPL�s Form 10-Qfor the quarter ended June 30, 1994 (File No. 0-337))

3.4 Bylaws of WPL, as amended, effective as of Jan. 30, 2001 (incorporated by reference to Exhibit 3.4 to WPL�s Form 10-Kfor the year 2000 (File No. 0-337))

3.5 Restated Articles of Incorporation of IPL (incorporated by reference to Exhibit 3.5 to IPL�s Form 10-K for the year 2003(File No. 0-4117-1))

3.6 Bylaws of IPL, as amended, effective as of Jan. 30, 2001 (incorporated by reference to Exhibit 3.6 to IPL�s Form 10-K forthe year 2000 (File No. 0-4117-1))

4.1 Amended and restated Five-Year Credit Agreement, dated Aug. 3, 2005, among Alliant Energy and the Banks set forththerein (incorporated by reference to Exhibit 4.4 to Alliant Energy�s Form 10-Q for the quarter ended June 30, 2005 (FileNo. 1-9894))

4.2 Rights Agreement, dated Jan. 20, 1999, between Alliant Energy and Wells Fargo Bank Minnesota, N.A., successor(incorporated by reference to Exhibit 4.1 to Alliant Energy�s Registration Statement on Form 8-A, dated Jan. 20, 1999(File No. 1-9894))

136

4.3 Amended and restated Five-Year Credit Agreement, dated Aug. 3, 2005, among WPL and the Banks set forth therein(incorporated by reference to Exhibit 4.5 to WPL�s Form 10-Q for the quarter ended June 30, 2005 (File No. 0-337))

4.4 Indenture of Mortgage or Deed of Trust dated Aug. 1, 1941, between WPL and U.S. Bank N.A. (U.S. Bank) and RichardH. Prokosch, successor, as Trustees, filed as Exhibit 7(a) in File No. 2-6409, and the indentures supplemental theretodated, respectively, Jan. 1, 1948, Sep. 1, 1948, June 1, 1950, April 1, 1951, April 1, 1952, Sep. 1, 1953, Oct. 1, 1954,



March 1, 1959, May 1, 1962, Aug. 1, 1968, June 1, 1969, Oct. 1, 1970, July 1, 1971, April 1, 1974, Dec. 1, 1975, May 1,1976, May 15, 1978, Aug. 1, 1980, Jan. 15, 1981, Aug. 1, 1984, Jan. 15, 1986, June 1, 1986, Aug. 1, 1988, Dec. 1, 1990,Sep. 1, 1991, Oct. 1, 1991, March 1, 1992, May 1, 1992, June 1, 1992 and July 1, 1992 (Second Amended Exhibit 7(b) inFile No. 2-7361; Amended Exhibit 7(c) in File No. 2-7628; Amended Exhibit 7.02 in File No. 2-8462; Amended Exhibit7.02 in File No. 2-8882; Second Amendment Exhibit 4.03 in File No. 2-9526; Amended Exhibit 4.03 in File No. 2-10406;Amended Exhibit 2.02 in File No. 2-11130; Amended Exhibit 2.02 in File No. 2-14816; Amended Exhibit 2.02 in File No.2-20372; Amended Exhibit 2.02 in File No. 2-29738; Amended Exhibit 2.02 in File No. 2-32947; Amended Exhibit 2.02in File No. 2-38304; Amended Exhibit 2.02 in File No. 2-40802; Amended Exhibit 2.02 in File No. 2-50308; Exhibit2.01(a) in File No. 2-57775; Amended Exhibit 2.02 in File No. 2-56036; Amended Exhibit 2.02 in File No. 2-61439;Exhibit 4.02 in File No. 2-70534; Amended Exhibit 4.03 in File No. 2-70534; Exhibit 4.02 in File No. 33-2579; AmendedExhibit 4.03 in File No. 33-2579; Amended Exhibit 4.02 in File No. 33-4961; Exhibit 4.24 in File No. 33-45726, Exhibit4.25 in File No. 33-45726, Exhibit 4.26 in File No. 33-45726, Exhibit 4.27 in File No. 33-45726, Exhibit 4.1 to WPL�sForm 8-K dated March 9, 1992, Exhibit 4.1 to WPL�s Form 8-K dated May 12, 1992, Exhibit 4.1 to WPL�s Form 8-Kdated June 29, 1992 and Exhibit 4.1 to WPL�s Form 8-K dated July 20, 1992 (File No. 0-337))

4.5 Indenture, dated as of June 20, 1997, between WPL and U.S. Bank, as Trustee, relating to debt securities (incorporated byreference to Exhibit 4.33 to Amendment No. 2 to WPL�s Registration Statement on Form S-3 (Registration No.33-60917))

4.6 Officers� Certificate, dated as of June 25, 1997, creating WPL�s 7% debentures due June 15, 2007 (incorporated byreference to Exhibit 4 to WPL�s Form 8-K, dated June 25, 1997 (File No. 0-337))

4.7 Officers� Certificate, dated as of Oct. 27, 1998, creating WPL�s 5.7% debentures due Oct. 15, 2008 (incorporated byreference to Exhibit 4 to WPL�s Form 8-K, dated Oct. 27, 1998 (File No. 0-337))

4.8 Officers� Certificate, dated as of March 1, 2000, creating WPL�s 7-5/8% debentures due March 1, 2010 (incorporated byreference to Exhibit 4 to WPL�s Form 8-K, dated March 1, 2000 (File No. 0-337))

4.9 Officers� Certificate, dated as of July 28, 2004, creating WPL�s 6.25% debentures due July 31, 2034 (incorporated byreference to Exhibit 4.1 to WPL�s Form 8-K, dated July 28, 2004 (File No. 0-337))

4.10 Amended and restated Five-Year Credit Agreement, dated Aug. 3, 2005, among IPL and the Banks set forth therein(incorporated by reference to Exhibit 4.6 to IPL�s Form 10-Q for the quarter ended June 30, 2005 (File No. 0-4117-1))

4.11 Indenture of Mortgage and Deed of Trust, dated as of Sep. 1, 1993, between IPL and J.P. Morgan Trust Company, N.A.(J.P. Morgan Trust) as successor in interest to Bank One Trust Company, N.A. (Bank One Trust), successor, as Trustee(incorporated by reference to Exhibit 4(c) to IPL�s Form 10-Q for the quarter ended Sep. 30, 1993), and the indenturessupplemental thereto dated, respectively, Oct. 1, 1993, Nov. 1, 1993, March 1, 1995, Sep. 1, 1996, April 1, 1997 and June9, 2005 (Exhibit 4(d) to IPL�s Form 10-Q dated Nov. 12, 1993, Exhibit 4(e) to IPL�s Form 10-Q dated Nov. 12, 1993,Exhibit 4(b) to IPL�s Form 10-Q dated May 12, 1995, Exhibit 4(c)(i) to IPL�s Form 8-K dated Sep. 19, 1996, Exhibit 4(a)to IPL�s Form 10-Q dated May 14, 1997 and Exhibit 4.1 to IPL�s Form 10-Q dated Aug. 8, 2005 (File No. 0-4117-1))

137

4.12 Indenture of Mortgage and Deed of Trust, dated as of Aug. 1, 1940, between IPL and J.P. Morgan Trust as successor ininterest to Bank One Trust, successor, as Trustee (incorporated by reference to Exhibit 2(a) to IPL�s RegistrationStatement, File No. 2-25347), and the indentures supplemental thereto dated, respectively, March 1, 1941, July 15, 1942,Aug. 2, 1943, Aug. 10, 1944, Nov. 10, 1944, Aug. 8, 1945, July 1, 1946, July 1, 1947, Dec. 15, 1948, Nov. 1, 1949, Nov.10, 1950, Oct. 1, 1951, March 1, 1952, Nov. 5, 1952, Feb. 1, 1953, May 1, 1953, Nov. 3, 1953, Nov. 8, 1954, Jan. 1, 1955,



Nov. 1, 1955, Nov. 9, 1956, Nov. 6, 1957, Nov. 4, 1958, Nov. 3, 1959, Nov. 1, 1960, Jan. 1, 1961, Nov. 7, 1961, Nov. 6,1962, Nov. 5, 1963, Nov. 4, 1964, Nov. 2, 1965, Sep. 1, 1966, Nov. 30, 1966, Nov. 7, 1967, Nov. 5, 1968, Nov. 1, 1969,Dec. 1, 1970, Nov. 2, 1971, May 1, 1972, Nov. 7, 1972, Nov. 7, 1973, Sep. 10, 1974, Nov. 5, 1975, July 1, 1976, Nov. 1,1976, Dec. 1, 1977, Nov. 1, 1978, Dec. 1, 1979, Nov. 1, 1981, Dec. 1, 1980, Dec. 1, 1982, Dec. 1, 1983, Dec. 1, 1984,March 1, 1985, March 1, 1988, Oct. 1, 1988, May 1, 1991, March 1, 1992, Oct. 1, 1993, Nov. 1, 1993, March 1, 1995,Sep. 1, 1996, April 1, 1997 and June 9, 2005 (Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No.2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a)in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347,Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in FileNo. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No.2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a)in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit 2(a) in File No. 2-25347,Exhibit 4.10 in IPL�s Form 10-K for the year 1966, Exhibit 4.10 in IPL�s Form 10-K for the year 1966, Exhibit 4.10 inIPL�s Form 10-K for the year 1967, Exhibit 4.10 in IPL�s Form 10-K for the year 1968, Exhibit 4.10 in IPL�s Form 10-Kfor the year 1969, Exhibit 1 in IPL�s Form 8-K dated December 1970, Exhibit 2(g) in File No. 2-43131, Exhibit 1 inIPL�s Form 8-K dated May 1972, Exhibit 2(i) in File No. 2-56078, Exhibit 2(j) in File No. 2-56078, Exhibit 2(k) in FileNo. 2-56078, Exhibit 2(l) in File No. 2-56078, Exhibit 1 in IPL�s Form 8-K dated July 1976, Exhibit 1 in IPL�s Form 8-Kdated December 1976, Exhibit 2(o) in File No. 2-60040, Exhibit 1 in IPL�s Form 10-Q dated June 30, 1979, Exhibit 2(q)in Form S-16 in File No. 2-65996, Exhibit 2 in IPL�s Form 10-Q dated March 31, 1982, Exhibit 4(s) in IPL�s Form 10-Kfor the year 1981, Exhibit 4(t) in IPL�s Form 10-K for the year 1982, Exhibit 4(u) in IPL�s Form 10-K for the year 1983,Exhibit 4(v) in IPL�s Form 10-K for the year 1984, Exhibit 4(w) in IPL�s Form 10-K for the year 1984, Exhibit 4(b) inIPL�s Form 10-Q dated May 12, 1988, Exhibit 4(c) in IPL�s Form 10-Q dated Nov. 10, 1988, Exhibit 4(d) in IPL�s Form10-Q dated Aug. 13, 1991, Exhibit 4(c) in IPL�s Form 10-K for the year 1991, Exhibit 4(a) in IPL�s Form 10-Q datedNov. 12, 1993, Exhibit 4(b) in IPL�s Form 10-Q dated Nov. 12, 1993, Exhibit 4(a) in IPL�s Form 10-Q dated May 12,1995, Exhibit 4(f) in IPL�s Form 8-K dated Sep. 19, 1996, Exhibit 4(b) in IPL�s Form 10-Q dated May 14, 1997 andExhibit 4.2 in IPL�s Form 10-Q dated Aug. 8, 2005)

4.13 Indenture (For Senior Unsecured Debt Securities), dated as of Aug. 1, 1997, between IPL and J.P. Morgan Trust assuccessor in interest to Bank One Trust, successor, as Trustee (incorporated by reference to Exhibit 4(j) to IPL�sRegistration Statement, File No. 333-32097)

4.14 The Original through the Nineteenth Supplemental Indentures of IPL, successor, to JPMorgan Chase Bank, N.A. andJames P. Freeman, successor, as Trustee, dated Jan. 1, 1948 securing First Mortgage Bonds (incorporated by reference toExhibits 4(b) through 4(t) to Interstate Power Company�s (IPC�s) Registration Statement No. 33-59352 dated March 11,1993)

4.14a Twentieth Supplemental Indenture of IPL, successor, to JPMorgan Chase Bank, N.A. and James P. Freeman, successor, asTrustees, dated May 15, 1993 (incorporated by reference to Exhibit 4(u) to IPC�s Registration Statement No. 33-59352dated March 11, 1993)

4.14b Twenty-First Supplemental Indenture of IPL, successor, to JPMorgan Chase Bank, N.A. and James P. Freeman, asTrustees, dated Dec. 31, 2001 (incorporated by reference to Exhibit 4.3 to IPL�s Form 8-K, dated Jan. 1, 2002 (File No.0-4117-1))

4.15 Indenture (For Senior Unsecured Debt Securities), dated as of Aug. 20, 2003, between IPL and J.P. Morgan Trust assuccessor in interest to Bank One Trust, as Trustee (incorporated by reference to Exhibit 4.11 to IPL�s RegistrationStatement on Form S-3 (Registration No. 333-108199))



4.16 Officer�s Certificate, dated as of Aug. 4, 1997, creating IPL�s 6-5/8% Senior Debentures, Series A, due Aug. 1, 2009(incorporated by reference to Exhibit 4.12 to IPL�s Form 10-K for the year 2000 (File No. 0-4117-1))

4.17 Officers� Certificate, dated as of March 6, 2001, creating IPL�s 6-3/4% Series B Senior Debentures due March 15, 2011(incorporated by reference to Exhibit 4 to IPL�s Form 8-K, dated March 6, 2001 (File No. 0-4117-1))

4.18 Officer�s Certificate, dated Sep. 10, 2003, creating IPL�s 5.875% Senior Debentures due Sep. 15, 2018 (incorporated byreference to Exhibit 4.1 to IPL�s Form 8-K, dated Sep. 10, 2003 (File No. 0-4117-1))

138

4.19 Officer�s Certificate, dated Oct. 14, 2003, creating IPL�s 6.45% Senior Debentures due Oct. 15, 2033 (incorporated byreference to Exhibit 4.1 to IPL�s Form 8-K, dated Oct. 14, 2003 (File No. 0-4117-1))

4.20 Officer�s Certificate, dated May 3, 2004, creating IPL�s 6.30% Senior Debentures due May 1, 2034 (incorporated byreference to Exhibit 4.1 to IPL�s Form 8-K, dated May 3, 2004 (File No. 0-4117-1))

4.20a Officer�s Certificate, dated as of Aug. 2, 2004, reopening IPL�s 6.30% Senior Debentures due May 1, 2034 (incorporatedby reference to Exhibit 4.1 to IPL�s Form 8-K, dated Aug. 2, 2004 (File No. 0-4117-1))

4.21 Officer�s Certificate, dated as of July 18, 2005, creating IPL�s 5.50% Senior Debentures due July 15, 2025 (incorporatedby reference to Exhibit 4 to IPL�s Form 8-K, dated July 18, 2005 (File No. 0-4117-1))

4.22 Indenture, dated as of Nov. 4, 1999, among Resources, Alliant Energy, as Guarantor, and U.S. Bank, as Trustee(incorporated by reference to Exhibit 4.1 to Resources� and Alliant Energy�s Registration Statement on Form S-4(Registration No. 333-92859)), and the indentures supplemental thereto dated, respectively, Nov. 4, 1999, Feb. 1, 2000,Nov. 15, 2001 and Dec. 26, 2002 (Exhibit 4.2 to Registration No. 333-92859, Exhibit 99.4 to Alliant Energy�s Form 8-Kdated Feb. 1, 2000 (File No. 1-9894), Exhibit 4.4 to Resources� and Alliant Energy�s Registration Statement on Form S-4(Registration No. 333-75020) and Exhibit 4.16a to Alliant Energy�s Form 10-K for the year 2002 (File No. 1-9894))

10.1 Service Agreement by and among WPL, South Beloit Water, Gas and Electric Company (South Beloit), IPL and AlliantEnergy Corporate Services, Inc. (Corporate Services) (incorporated by reference to Exhibit 10.1 to Alliant Energy�s Form10-Q for the quarter ended June 30, 1998 (File No. 1-9894))

10.2 Service Agreement by and among Resources and Corporate Services (incorporated by reference to Exhibit 10.2 to AlliantEnergy�s Form 10-Q for the quarter ended June 30, 1998 (File No. 1-9894))

10.3 System Coordination and Operating Agreement dated April 11, 1997, among IPL, WPL and Corporate Services(incorporated by reference to Exhibit 10.3 to Alliant Energy�s Form 10-Q for the quarter ended June 30, 1998 (File No.1-9894)

10.4 Joint Power Supply Agreement among Wisconsin Public Service Corporation (WPSC), WPL, and Madison Gas &Electric Company (MGE), dated Feb. 2, 1967 (incorporated by reference to Exhibit 4.09 of WPSC in File No. 2-27308)

10.4a Amendment No. 1 to Joint Power Supply Agreement dated Feb. 2, 1967 among WPSC, WPL, and MGE (incorporated byreference to Exhibit 10.1 to WPL�s Form 10-Q for the quarter ended Sep. 30, 2001 (File No. 0-337))

10.5 Joint Power Supply Agreement among WPSC, WPL, and MGE, dated July 26, 1973 (incorporated by reference to Exhibit5.04A of WPSC in File No. 2-48781)



10.6 Basic Generating Agreement, Unit 4, Edgewater Generating Station, dated June 5, 1967, between WPL and WPSC(incorporated by reference to Exhibit 4.10 of WPSC in File No. 2-27308)

10.7 Agreement for Construction and Operation of Edgewater 5 Generating Unit, dated Feb. 24, 1983, between WPL,Wisconsin Electric Power Company (WEPCO) and WPSC (incorporated by reference to Exhibit 10C-1 to WPSC�s Form10-K for the year 1983 (File No. 1-3016))

10.7a Amendment No. 1 to Agreement for Construction and Operation of Edgewater 5 Generating Unit, dated Dec. 1, 1988(incorporated by reference to Exhibit 10C-2 to WPSC�s Form 10-K for the year 1988 (File No. 1-3016))

10.8 Revised Agreement for Construction and Operation of Columbia Generating Plant among WPSC, WPL, and MGE, datedJuly 26, 1973 (incorporated by reference to Exhibit 5.07 of WPSC in File No. 2-48781)

10.9 Operating and Transmission Agreement between Central Iowa Power Cooperative (CIPCO) and IPL (incorporated byreference to Exhibit 10(q) to IPL�s Form 10-K for the year 1990 (File No. 0-4117-1))

139

10.10 Basic Generating Agreement dated April 16, 1975 between Iowa Public Service Company, Iowa Power and LightCompany, Iowa-Illinois Gas and Electric Company and IPL for the joint ownership of Ottumwa Generating Station-Unit 1(OGS-1) (incorporated by reference to Exhibit 1 to IPL�s Form 10-K for the year 1977 (File No. 0-4117-1))

10.10a Addendum Agreement to the Basic Generating Agreement for OGS-1 dated Dec. 7, 1977 between Iowa Public ServiceCompany, Iowa-Illinois Gas and Electric Company, Iowa Power and Light Company and IPL for the purchase of 15%ownership in OGS-1 (incorporated by reference to Exhibit 3 to IPL�s Form 10-K for the year 1977 (File No. 0-4117-1))

10.11 Asset Contribution Agreement between American Transmission Company LLC (ATC) and WEPCO, WPL, WPSC, MGE,Edison Sault Electric Company and South Beloit, dated as of Dec. 15, 2000 (incorporated by reference to Exhibit 10.15 toWPL�s Form 10-K for the year 2000 (File No. 0-337))

10.11a Addenda to the Asset Contribution Agreement between ATC and WEPCO, WPL, WPSC, MGE, Edison Sault ElectricCompany and South Beloit, dated as of Dec. 15, 2000 (incorporated by reference to Exhibit 10.15a to WPL�s Form 10-Kfor the year 2000 (File No. 0-337))

10.12 Operating Agreement of ATC, dated as of Jan. 1, 2001 (incorporated by reference to Exhibit 10.16 to WPL�s Form 10-Kfor the year 2000 (File No. 0-337))

10.13 Sales Agreement, dated April 9, 2004, between Alliant Energy and Cantor Fitzgerald & Co. (incorporated by reference toExhibit 1.3 to Alliant Energy�s Registration Statement on Form S-3 (Registration No. 333-114361))

10.14# Alliant Energy Long-Term Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to AlliantEnergy�s Form 10-Q for the quarter ended June 30, 1999 (File No. 1-9894))

10.15# Alliant Energy 2002 Equity Incentive Plan (EIP) (incorporated by reference to Exhibit 4.2 to Alliant Energy�sRegistration Statement on Form S-8 (Registration No. 333-88304))

10.15a# Form of Non-qualified Stock Option Agreement pursuant to the Alliant Energy EIP (incorporated by reference to Exhibit10.1 to Alliant Energy�s Form 10-Q for the quarter ended Sep. 30, 2004 (File No. 1-9894))



10.15b# Form of Restricted Stock Agreement pursuant to the Alliant Energy EIP (incorporated by reference to Exhibit 10.2 toAlliant Energy�s Form 10-Q for the quarter ended Sep. 30, 2004 (File No. 1-9894))

10.15c# Form of Performance Share Grant pursuant to the Alliant Energy EIP (incorporated by reference to Exhibit 10.3 to AlliantEnergy�s Form 10-Q for the quarter ended Sep. 30, 2004 (File No. 1-9894))

10.15d# Form of Performance Contingent Restricted Stock Agreement pursuant to the Alliant Energy EIP (incorporated byreference to Exhibit 10.1 to Alliant Energy�s Form 8-K dated Dec. 1, 2004 (File No. 1-9894))

10.16# Alliant Energy Key Employee Deferred Compensation Agreement for Key Employees (KEDCP) (incorporated byreference to Exhibit 4.2 to Alliant Energy�s Registration Statement on Form S-8 (Registration No. 333-51126)

10.17# KEDCP (incorporated by reference to Exhibit 10(n) to IES Industries Inc.�s (IES�s) Form 10-K for the year 1987 (FileNo. 1-9187)

10.17a# Amendments to Key Employee Deferred Compensation Agreement for Key Employees (incorporated by reference toExhibit 10(v) to IES�s Form 10-Q for the quarter ended March 31, 1990 (File No. 1-9187))

10.18# Alliant Energy Deferred Compensation Plan for Directors, as amended and restated effective Jan. 1, 2000, amended Nov.14, 2001 (incorporated by reference to Exhibit 10.22 to Alliant Energy�s Form 10-K for the year 2001 (File No. 1-9894))

10.19# Alliant Energy Rabbi Trust Agreement for Deferred Compensation Plans

10.20# Alliant Energy Grantor Trust for Deferred Compensation Agreements (Key Employees) (incorporated by reference toExhibit 4.4 to Alliant Energy�s Registration Statement on Form S-8 (Registration No. 33-51126))

10.21# Alliant Energy Grantor Trust for Deferred Compensation Agreements (Directors) (incorporated by reference to Exhibit 4.3to Alliant Energy�s Registration Statement on Form S-8 (Registration No. 33-51126))

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10.22# Form of Supplemental Retirement Agreement (SRA) (incorporated by reference to Exhibit 10.15 to Alliant Energy�sForm 10-Q for the quarter ended June 30, 1998 (File No. 1-9894))

10.23# Alliant Energy Excess Plan (incorporated by reference to Exhibit 10.33 to Alliant Energy�s Form 10-K for the year 2000(File No. 1-9894))

10.24# SRA by and between Alliant Energy and W.D. Harvey, E.G. Protsch and B.J. Swan (incorporated by reference to Exhibit10.5 to Alliant Energy�s Form 10-Q for the quarter ended Sep. 30, 2003 (File No. 1-9894))

10.25# SRA by and between Alliant Energy and T.L. Hanson, J.E. Kratchmer, T.L. Aller and P.L. Kampling (incorporated byreference to Exhibit 10.7 to Alliant Energy�s Form 10-Q for the quarter ended Sep. 30, 2003 (File No. 1-9894))

10.26# SRA by and between Alliant Energy and D.K. Doyle

10.27# Key Executive Employment and Severance Agreement (KEESA), dated March 29, 1999, by and between Alliant Energyand each of W.D. Harvey, E.G. Protsch and B.J. Swan (incorporated by reference to Exhibit 10.3 to Alliant Energy�sForm 10-Q for the quarter ended March 31, 1999 (File No. 1-9894))



10.28# KEESA, dated March 29, 1999, by and between Alliant Energy and D.K. Doyle; dated May 22, 2002, by and betweenAlliant Energy and T.L. Hanson; dated April 11, 2003, by and between Alliant Energy and J.E. Kratchmer; and dated Aug.29, 2005, by and between Alliant Energy and P.L. Kampling (incorporated by reference to Exhibit 10.4 to AlliantEnergy�s Form 10-Q for the quarter ended March 31, 1999 (File No. 1-9894))

10.29# KEESA, dated Feb. 4, 2004, by and between Alliant Energy and T.L. Aller (incorporated by reference to Exhibit 10.2 toAlliant Energy�s Form 10-Q for the quarter ended March 31, 2004 (File No. 1-9894))

10.30# Summary of Compensation and Benefits for Non-Employee Directors of Alliant Energy, IPL and WPL, effective Jan. 1,2006 (incorporated by reference to Exhibit 10.1 to Alliant Energy�s Form 8-K dated Nov. 30, 2005 (File No. 1-9894))

10.31# Summary of 2006 Management Incentive Compensation Plan

12.1 Ratio of Earnings to Fixed Charges for Alliant Energy

12.2 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred DividendRequirements for IPL

12.3 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred DividendRequirements for WPL

21 Subsidiaries of Alliant Energy and WPL

23.1 Consent of Independent Registered Public Accounting Firm for Alliant Energy

23.2 Consent of Independent Registered Public Accounting Firm for IPL

23.3 Consent of Independent Registered Public Accounting Firm for WPL

31.1 Certification of the Chairman, President and CEO for Alliant Energy

31.2 Certification of the Senior Executive Vice President and CFO for Alliant Energy

31.3 Certification of the Chairman and CEO for IPL

31.4 Certification of the CFO for IPL

31.5 Certification of the Chairman and CEO for WPL

31.6 Certification of the CFO for WPL

32.1 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for Alliant Energy

32.2 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for IPL

32.3 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for WPL

# - A management contract or compensatory plan or arrangement.



141

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrants agree to furnish to the SEC, upon request, any instrument defining the rightsof holders of unregistered long-term debt not filed as an exhibit to this combined Form 10-K. No such instrument authorizes securities inexcess of 10% of the total assets of Alliant Energy, WPL or IPL, as the case may be.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

AdditionsBalance, Charged to Charged to Other Balance,

Description Jan. 1 Expense Accounts (1) Deductions (2) Dec. 31(in millions)

Valuation and Qualifying Accounts Which are Deducted in the Balance Sheet From the Assets to Which They Apply:Accumulated Provision for Uncollectible Accounts:

Alliant Energy CorporationYear ended Dec. 31, 2005 $7.2 $9.6 $3.2 $14.2 $5.8Year ended Dec. 31, 2004 6.0 9.6 3.3 11.7 7.2Year ended Dec. 31, 2003 4.9 9.2 1.5 9.6 6.0

Interstate Power and Light CompanyYear ended Dec. 31, 2005 $2.6 $8.3 $-- $8.4 $2.5Year ended Dec. 31, 2004 1.4 6.4 -- 5.2 2.6Year ended Dec. 31, 2003 1.3 4.5 -- 4.4 1.4

Wisconsin Power and Light CompanyYear ended Dec. 31, 2005 $1.1 $0.6 $3.2 $2.2 $2.7Year ended Dec. 31, 2004 3.1 0.3 3.3 5.6 1.1Year ended Dec. 31, 2003 2.2 4.4 1.5 5.0 3.1

Note: The above provisions relate to various customer, notes and other receivable balances included in various line items on the respectiveConsolidated Balance Sheets.

Other Reserves:Accumulated Provision for Nuclear Refueling Outage Provision and Other Miscellaneous Reserves:

Alliant Energy CorporationYear ended Dec. 31, 2005 $22.6 $20.4 $-- $21.3 $21.7Year ended Dec. 31, 2004 17.1 11.7 -- 6.2 22.6Year ended Dec. 31, 2003 27.6 11.8 -- 22.3 17.1

Interstate Power and Light CompanyYear ended Dec. 31, 2005 $15.5 $14.0 $-- $17.5 $12.0Year ended Dec. 31, 2004 11.3 8.0 -- 3.8 15.5Year ended Dec. 31, 2003 21.0 9.3 -- 19.0 11.3

Wisconsin Power and Light CompanyYear ended Dec. 31, 2005 $5.3 $2.8 $-- $3.4 $4.7Year ended Dec. 31, 2004 4.7 2.6 -- 2.0 5.3Year ended Dec. 31, 2003 4.9 1.8 -- 2.0 4.7

(1) Accumulated provision for uncollectible accounts: In accordance with its regulatory treatment, certain amounts provided by WisconsinPower and Light Company are recorded in regulatory assets.

(2) Deductions are of the nature for which the reserves were created. In the case of the accumulated provision for uncollectible accounts,deductions from this reserve are reduced by recoveries of amounts previously written off.

The amounts above reflect continuing operations for all periods presented.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto duly authorized on the 1st day of March 2006.

ALLIANT ENERGY CORPORATIONBy: /s/William D. Harvey

William D. HarveyChairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities indicated on the 1st day of March 2006.

/s/ William D. Harvey Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)William D. Harvey

/s/ Eliot G. Protsch Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)Eliot G. Protsch

/s/ John E. Kratchmer Vice President-Controller and Chief Accounting Officer (Principal Accounting Officer)John E. Kratchmer

/s/ Michael L. Bennett Director /s/ Dean C. Oestreich Director /s/ Carol P. Sanders DirectorMichael L. Bennett Dean C. Oestreich Carol P. Sanders

/s/ Singleton B. McAllister Director /s/ David A. Perdue Director /s/ Robert W. Schlutz DirectorSingleton B. McAllister David A. Perdue Robert W. Schlutz

/s/ Ann K. Newhall Director /s/ Judith D. Pyle Director /s/ Anthony R. Weiler DirectorAnn K. Newhall Judith D. Pyle Anthony R. Weiler

SIGNATURES


INTERSTATE POWER AND LIGHT COMPANYBy: /s/William D. Harvey

William D. HarveyChairman and Chief Executive Officer


/s/ William D. Harvey Chairman, Chief Executive Officer and Director (Principal Executive Officer)William D. Harvey



/s/ Eliot G. Protsch Chief Financial Officer (Principal Financial Officer)Eliot G. Protsch





143

SIGNATURES


WISCONSIN POWER AND LIGHT COMPANYBy: /s/William D. Harvey

William D. HarveyChairman and Chief Executive Officer


/s/ William D. Harvey Chairman, Chief Executive Officer and Director (Principal Executive Officer)William D. Harvey

/s/ Eliot G. Protsch Chief Financial Officer (Principal Financial Officer)Eliot G. Protsch







144

ALLIANT ENERGY CORPORATIONINTERSTATE POWER AND LIGHT COMPANYWISCONSIN POWER AND LIGHT COMPANY

Exhibit Index to Annual Report on Form 10-KFor the fiscal year ended Dec. 31, 2005

ExhibitNumber Description

10.19 Alliant Energy Rabbi Trust Agreement for Deferred Compensation Plans10.26 SRA by and between Alliant Energy and D.K. Doyle10.31 Summary of 2006 Management Incentive Compensation Plan12.1 Ratio of Earnings to Fixed Charges for Alliant Energy12.2 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and

Preferred Dividend Requirements for IPL12.3 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and

Preferred Dividend Requirements for WPL21 Subsidiaries of Alliant Energy and WPL23.1 Consent of Independent Registered Public Accounting Firm for Alliant Energy23.2 Consent of Independent Registered Public Accounting Firm for IPL23.3 Consent of Independent Registered Public Accounting Firm for WPL31.1 Certification of the Chairman, President and CEO for Alliant Energy31.2 Certification of the Senior Executive Vice President and CFO for Alliant Energy31.3 Certification of the Chairman and CEO for IPL31.4 Certification of the CFO for IPL31.5 Certification of the Chairman and CEO for WPL31.6 Certification of the CFO for WPL32.1 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for Alliant Energy32.2 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for IPL32.3 Written Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for WPL

145



EXHIBIT 10.19

ALLIANT ENERGY RABBI TRUST AGREEMENT

This Agreement is made and entered into as of December __, 2005, by and between Alliant Energy Corporate Services, Inc., an Iowacorporation (the �Sponsor�), and Wells Fargo Bank, N.A., a national banking association, as trustee (the �Trustee�);

W I T N E S S E T H:

WHEREAS, the Sponsor, Alliant Energy Corporation (�AEC�), Interstate Power and Light Company (�IES�) and WisconsinPower and Light Company (�WPL�) have adopted or entered into various nonqualified deferred compensation plans and agreements and haveincurred or expect to incur liability under the terms of such plans with respect to the individuals participating in such plans; and

WHEREAS, on December 1, 2000, the Sponsor, IES and WPL authorized the Sponsor to, and it did, merge various trusts into atrust agreement with Marshall & Ilsley Trust Company (the �Existing Trust�); and

WHEREAS, on December 1, 2000, AEC established a trust pursuant to a trust agreement with Marshall & Ilsley Trust Company(the �AEC Trust�) to fund the Alliant Energy Corporation Deferred Compensation Plan for Directors (the �Directors� Plan�); and

WHEREAS, the Sponsor wishes to continue a trust arrangement and to contribute to such trust assets that shall be held therein,subject to the claims of creditors in the event of Insolvency, as herein defined, until paid to plan participants and their beneficiaries in suchmanner and at such times as specified in the plans; and

WHEREAS, the Sponsor and AEC wish to merge the AEC Trust into the Existing Trust; and

WHEREAS, the Sponsor enters into this Agreement for the purpose of restating the Existing Trust and the AEC Trust, merging theAEC Trust into the Existing Trust, and designating the Trustee as the successor trustee thereunder (the ongoing trust hereinafter the �Trust�);and

WHEREAS, the Trust shall be for the benefit of the participants and beneficiaries of the nonqualified deferred compensation plansand agreements listed in Appendix A of this Agreement (referred to herein as the �Plans,� or, in reference to each, as a �Plan�); and

WHEREAS, the plan sponsor of each Plan as indicated in Appendix A shall have responsibilities with respect to such Plan hereunder(the sponsor of each Plan being the �Company� with respect to such Plan); and

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the statusof the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highlycompensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974 (�ERISA�) with respect to thosePlans subject to ERISA; and

WHEREAS, it is the intention of each Company to make contributions to the Trust to provide itself with a source of funds to assistit in the meeting of its liabilities under the Plans; and

WHEREAS, while the assets of the Trust Fund are not �Plan assets� under ERISA, the intention of the parties is to manage the TrustFund in certain respects in a manner consistent with the operation of certain other trust arrangements between the parties which are subject toERISA;



NOW, THEREFORE, the Sponsor and the Trustee do hereby establish the Trust and the parties agree that the Trust Fund shall becomprised, held and disposed of as follows:

SECTION 1

ESTABLISHMENT OF TRUST

1.1 Effective January 1, 2006, the Trust is continued, and the assets of the Existing Trust shall be transferred to the Trustee onJanuary 3, 2006, except for those assets related to the Alliant Energy Key Employee Deferred Compensation Plan and the Directors� Plan whichshall be transferred on March 1, 2006. The Trustee shall maintain separate accounts within the Trust to record the assets thereof attributable tothe Plans of each of the corporate sponsors as indicated in Appendix A (the �Plan Accounts�).

1.2 The Trust shall be irrevocable.

1.3 The Trust is intended to be a grantor trust, of which each Company is the grantor with respect to its Plan Account, withinthe meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the �Code�), and shallbe construed accordingly.

1.4 The principal of the Trust Fund, and any earnings thereon, shall be held separate and apart from other funds of the Companyand shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and theirbeneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust Fund. Any rights created underthe Plans and this Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against the Company. Anyassets held by the Trust will be subject to the claims of general creditors under federal and state law in the event of Insolvency, as defined inSection 3.1 herein.

1.5 Within 60 days following a Change in Control, each Company shall make an irrevocable contribution to the applicablePlan Account within the Trust so that the Trust assets for that Plan Account are at least the sum of the participants� and beneficiaries� accruedbenefits

2

pursuant to the terms of the Plans. For Plans with benefit formulas which are defined contribution formulas, the amount of the accrued benefitsshall be the account balances as of the date of the Change in Control. For Plans with cash balance formulas, the amount of the accrued benefitsfor participants who are not in pay status shall be 120% of the lump sum amount that would have been distributable as of the last day of theplan year coincidental with or immediately preceding the date of the Change in Control. For Plans with defined benefit formulas other thancash balance and for those participants in pay status under a cash balance plan with a grandfathered annuity benefit, the amount of the accruedbenefits shall be 120% of the Accumulated Benefit Obligation as of the measurement date for the corporate fiscal year ending coincidental withor immediately preceding the date of the Change in Control, based on actuarial assumptions most recently applied in calculating the Company�sliability under Financial Accounting Standard 87. Notwithstanding the foregoing, with respect to the Directors� Plan, such contribution shallbe made within ten business days following a Change in Control.

1.6 As of each December 31 following a Change in Control, (�Valuation Date�), each Company shall determine the amountof the contribution which would have been required pursuant to Section 1.5 if the Change in Control had occurred on such Valuation Date andmake an irrevocable contribution of such amount, if any, within 60 days following such December 31. Notwithstanding the foregoing, withrespect to the Directors� Plan, such contribution shall be made within ten business days following such December 31.

1.7 Within 60 days following a Potential Change in Control, each Company shall make a contribution to the applicable PlanAccount within the Trust in the amount that would have been required to be contributed pursuant to Section 1.5 if the Potential Change inControl had been a Change in Control. In the event that a Change in Control shall not have occurred within the time specified in the followingsentence, at the written direction of the Sponsor, the contribution to the Trust as a result of the preceding sentence, plus investment gains thereonor minus investment losses thereon, shall be released and delivered to the Company. The specified time for the preceding sentence is twelve



(12) months after the occurrence of a Potential Change in Control unless proceedings are then pending to obtain necessary regulatory approvalsto permit a Change in Control, in which case the specified time is three (3) months after such proceedings have concluded. Notwithstandingthe foregoing, with respect to the Directors� Plan, such contribution shall be made within ten business days following such Potential Change inControl.

1.8 Each Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or otherproperty in trust with the Trustee for its Plan Account to augment the principal to be held, administered and disposed of by the Trustee asprovided in this Agreement. The Plan participants and their beneficiaries shall have no right to compel any such discretionary deposits. Anysuch decision concerning a Plan or accounts for non-employee directors of a Company shall be separate and distinct from any such decisionconcerning a Plan or account for employees.

1.9 The Trustee shall have no obligation to compel any deposits that are required pursuant to this Agreement.

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SECTION 2

PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES

2.1 On behalf of the Company, the Sponsor shall deliver to the Trustee a schedule (the �Payment Schedule�) that indicates theamounts payable in respect of each Plan participant (and his or her beneficiaries), or that provides a formula or other instructions acceptableto the Trustee for determining the amounts so payable, the form in which such amounts are to be paid (as provided for or available under thePlans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments tothe Plan participants and their beneficiaries in accordance with the most recent Payment Schedule received by the Trustee. Based exclusivelyupon direction from the Sponsor as to time and amounts, the Trustee shall make provision for the reporting and withholding of any federal andstate taxes (other than FICA and FUTA taxes) that may be required to be withheld with respect to the payment of benefits pursuant to the termsof the Plans and, based exclusively upon direction from the Sponsor, shall pay amounts withheld to taxing authorities. If applicable, the Sponsorshall direct the Trustee to remit to the Sponsor or the Company any FICA, FUTA and local taxes with respect to benefit payments and theSponsor or the Company, as applicable, shall have the responsibility for determining, reporting and paying the FICA, FUTA and local taxes tothe appropriate taxing authorities. The Trustee acts solely as the Company�s agent for purposes of reporting and withholding on payments fromthe Trust, and the Company shall be solely responsible for determining that such amounts have been reported, withheld and paid to appropriatetaxing authorities in a timely manner.

2.2 The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plans shall be determined by theCompany or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under theprocedures set out in the Plans.

2.3 The Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due underthe terms of the Plans. Through the Sponsor, the Company shall notify the Trustee of its decision to make payment of benefits directly priorto the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust Fund, and any earnings thereon,are not sufficient to make payments of benefits in accordance with the terms of the Plans, the Company shall make the balance of each suchpayment as it falls due. The Trustee shall notify the Company through the Sponsor where principal and earnings are not sufficient.

SECTION 3

TRUSTEE RESPONSIBILITY REGARDING PAYMENTSTO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT



3.1 The Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is Insolvent. TheCompany shall be considered �Insolvent� for purposes of this Agreement if it is unable to pay its debts as they become due, or if it is subject toa pending proceeding as a debtor under the United States Bankruptcy Code.

4

3.2 At all times during the continuance of this Trust, as provided in Section 1.4 hereof, the principal and income of the TrustFund shall be subject to claims of general creditors of the Company under federal and state law as set forth below.

3.3 The Board of Directors and the Chief Executive Officer of the Sponsor shall have the duty to inform the Trustee in writingof the Company�s Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company hasbecome Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinuepayment of benefits to the participants or their beneficiaries of the Plan or Plans of which such Company is the sponsor.

3.4 Unless the Trustee has actual knowledge of the Company�s Insolvency, or has received notice from the Sponsor or a personclaiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent.The Trustee may in all events rely on such evidence concerning the Company�s solvency as may be furnished to the Trustee and that providesthe Trustee with a reasonable basis for making a determination concerning the Company�s solvency.

(a) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue paymentsto participants or their beneficiaries of the Plan or Plans of which such Company is the sponsor and shall hold the assets of suchPlan Accounts within the Trust Fund for the benefit of the Company�s general creditors. Nothing in this Agreement shall in any waydiminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of the Company with respectto benefits due under the Plans or otherwise.

(b) The Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance withSection 2 of this Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent).

3.5 Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant toSection 3.2 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregateamount of all payments due to Plan participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, lessthe aggregate amount of any payments made to Plan participants or their beneficiaries by the Company in lieu of the payments provided forhereunder during any such period of discontinuance.

3.6 Notwithstanding any provisions herein to the contrary, any Company Stock (as defined in Section 5.7) or other assetscontributed by a Company to a Plan Account for the benefit of the employees of affiliates shall be subject to the Insolvency provisions ofSection 3 with respect to the Company which is the sponsor of the applicable Plan and, upon the termination of the Trust after payment of allbenefits to participants and beneficiaries, shall revert to the contributing Company.

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SECTION 4

PAYMENTS TO COMPANY

Except as provided in Sections 1.7, 2.1 and 3 hereof, the Sponsor shall have no right or power to direct the Trustee to return to theCompany or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiariespursuant to the terms of the Plans.



SECTION 5

INVESTMENT AUTHORITY

5.1 Subject to Section 5.6, except to the extent that an Investment Manager or Named Fiduciary is otherwise appointed inaccordance with Sections 5.3, 5.4 or 5.5, the Sponsor shall act as a Named Fiduciary in accordance with Section 5.5 with respect to the entireTrust Fund, and the Trustee shall be subject to the directions of the Sponsor as provided in such Section 5.5. Subject to Section 5.6, except tothe extent that the Trustee is itself appointed as an Investment Manager pursuant to Section 5.4, it shall always be a directed trustee and followin good faith the investment directions of the Sponsor, an Investment Manager, or a Named Fiduciary, as applicable. In such regard, the Trusteeshall invest and reinvest the principal and income of the Trust Fund with the care, skill, prudence, and diligence under the circumstances thenprevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like characterand with like aims. Without limiting the generality of the foregoing, the investments and reinvestments of the Trust Fund shall be subject to thefollowing:

(a) Investments shall be as consistent as reasonably possible with any funding policy communicated to the Trusteein writing by the Sponsor pursuant to the Plans. The Trustee may rely on the latest such communication received by it without furtherinquiry or verification.

(b) The Trustee may invest and reinvest principal and income of the Trust Fund in common, preferred, and otherstocks of any corporation; voting trust certificates; interests in investment trusts, including, without limiting the generality thereof,participations issued by an investment company as defined in the Investment Company Act of 1940, as from time to time amended;bonds, notes, and debentures, secured or unsecured; mortgages on real or personal property; conditional sales contracts; real estateand leases; and limited partnerships.

(c) To the extent permitted by the Code and other applicable laws, the Trustee may commingle for investment allor any part of the funds of the Trust Fund with funds of other grantor trusts established by the Sponsor or any entity directly orindirectly controlling, controlled by, or under common control with the Sponsor; provided that records are at all times maintained ofthe portion of the commingled funds properly allocable to each trust.

6

(d) The Trustee may invest and reinvest the principal and income of the Trust Fund by investing in an annuitycontract or contracts (including any agreement or agreements supplemental thereto) issued by an insurance company.

(e) The Trustee may engage in the writing, sale, and buying in, of covered call option contracts; and the Trusteemay acquire and may exercise options to purchase or sell securities or other assets.

(f) The Trustee may invest and reinvest the principal and income of the Trust Fund in stock, securities, or realproperty of the Sponsor or any entity directly or indirectly controlling, controlled by, or under common control with the Sponsor.

(g) The Trustee may invest and reinvest principal and income of the Trust Fund in deposits (including savingsaccounts, savings certificates, and similar interest-bearing instruments or accounts) in itself or its affiliates, provided such depositsbear a reasonable rate of interest.

(h) The Trustee may purchase or sell financial futures contracts in transactions executed through a generallyrecognized commodities or securities exchange.

(i) The Trustee may lend any securities or security from time to time constituting a part of the Trust Fund inexchange for such consideration and upon such terms and conditions as the Trustee deems appropriate. In any such transaction theTrustee may transfer legal title to the securities being loaned to the obligor, and may permit the obligor to return to the Trust Fundsecurities that are identical (but not necessarily evidenced by the same certificates) to those transferred to it by the Trustee hereunder.



5.2 If a Plan provides for the purchase of a life insurance policy or annuity contract on the life of a participant, the Trustee shallmake such purchases on written direction of the Sponsor. Each such direction shall be complete with respect to the terms of the purchase. TheSponsor shall give written direction as to any subsequent action to be taken with respect to each such policy or contract, it being intended thatthe Trustee shall have no discretion with respect thereto.

5.3 Subject to Section 5.6 hereof, the Sponsor may appoint one or more insurance companies that meet the requirements ofSection 3(38) of ERISA to serve as an Investment Manager. The appointment of any such Investment Manager and investment of the TrustFund pursuant to such appointment shall be subject to the following, notwithstanding any provisions of this Agreement to the contrary:

(a) Written notice of each such appointment shall be given to the Trustee a reasonable time in advance of theeffective date of the appointment.

(b) The Sponsor shall determine the terms of each contract to be entered into between such insurance company andthe Trustee (including any agreement or agreements supplemental thereto) pursuant to which investment management services shallbe performed by the insurance company. On written direction of the Sponsor the

7

Trustee shall make application for each such contract and shall hold the contract as an asset of the Trust Fund.

(c) The Trustee shall pay such premiums to the insurance company pursuant to such contract as may be directedin writing by the Sponsor; provided, however, that no such payment shall be made until the Trustee has been furnished with anacknowledgement in writing by the insurance company that it is a fiduciary with respect to one or more Plans and this Trust.

(d) Except as otherwise agreed in writing by the Trustee and the Sponsor, the Trustee shall take only such actionsas contractholder of such contract as may be directed in writing by the Sponsor.

(e) Any direction by the Sponsor with respect to such contract shall be complete as to the terms with respect thereto,it being intended that the Trustee shall have no discretion whatsoever with respect to the provisions of such contract or actions takenpursuant thereto.

(f) The insurance company serving as an Investment Manager shall determine in good faith the fair market valueof assets held in such contracts no less often than annually, assuming an orderly liquidation at the time of such determination if themarket value is not readily available.

5.4 Subject to Section 5.6 hereof, the Sponsor may appoint one or more parties that are registered as investment advisers underthe Investment Advisers Act of 1940 to serve as an Investment Manager as defined in Section 3(38) of ERISA. The appointment of any suchInvestment Manager and investment of the Trust Fund pursuant to such appointment shall be subject to the following, notwithstanding anyprovisions hereof to the contrary:

(a) Written notice of each such appointment shall be given to the Trustee a reasonable time in advance of theeffective date of the appointment. The notice shall state what portion of the Trust Fund is to be invested by the Investment Managerand shall direct the Trustee to segregate such portion of the Trust Fund into a separate account for the Investment Manager. Eachsuch separate account is referred to in this section as an Investment Account. The Trustee shall be provided a copy of the Sponsor�swritten agreement with the Investment Manager.

(b) The Trustee shall not act on any direction or instruction of the Investment Manager until the Trustee has beenfurnished with an acknowledgement in writing by the Investment Manager that it is a fiduciary with respect to one or more Plansand this Trust.



(c) Payment of the cost of the acquisition, sale, or exchange of any security or other property for an InvestmentAccount shall be charged to that Investment Account unless the agreement between the Sponsor and Investment Manager providesotherwise.

(d) So long as the appointment of an Investment Manager is in effect, the Investment Manager shall have full powerand authority to direct the Trustee as to, and full responsibility for, investment of its Investment Account and for the retention and

8

disposition of any assets in its Investment Account. Subject to any limitations in the agreement between the Company and theInvestment Manager, the Investment Manager shall have exclusive authority and discretion to invest and reinvest the principal andinterest of the Trust Fund, subject to the provisions of Section 5.1.

(e) Unless the written agreement between the Sponsor and Investment Manager expressly provides that the Sponsorshall have the voting power with respect to all stocks and other securities in the Investment Account, the Investment Manager shallhave voting power with respect to all such stocks and other securities.

(f) The Trustee shall make available to an Investment Manager copies of or extracts from such portions of itsaccounts, books, or records relating to the Investment Account of such Investment Manager as the Trustee may deem necessary orappropriate in connection with the exercise of the Investment Manager�s function, or as the Sponsor may direct.

(g) All charges (other than those covered in subsection (d) above) against each Investment Account shall be madein such proportions as the Sponsor may direct from time to time.

(h) If the authority of an Investment Manager is terminated, unless and until a successor Investment Manager isappointed with respect to such Investment Account or the Investment Account is merged into a different Investment Account,a Named Fiduciary Account, or an insurance company contract, the Sponsor shall be responsible to direct the Trustee as to theinvestment, management and disposition of the assets held in such Investment Account. Until receipt of written notice of thetermination of the authority of an investment manager, the Trustee shall be fully protected in assuming the continuing authority ofsuch Investment Manager.

(i) Any direction by an Investment Manager shall be complete as to the terms with respect thereto, it being intendedthat the Trustee shall have no obligation whatsoever to invest or otherwise manage any asset of an Investment Account.

(j) The Investment Manager shall determine in good faith the fair market value of assets held in an InvestmentAccount no less often than annually, assuming an orderly liquidation at the time of such determination if the market value is notreadily available.

5.5 Subject to Section 5.6 hereof, the Sponsor may designate one or more Named Fiduciaries that shall have authority todirect the Trustee as to the investment and reinvestment of all or a part of the Trust Fund. The designation of any such Named Fiduciaryand investment of the Trust Fund pursuant to such designation shall be subject to the following, notwithstanding any provisions hereof to thecontrary:

(a) Written notice of each such appointment shall be given to the Trustee a reasonable time in advance of theeffective date of the appointment. Such notice shall state what portion of the Trust Fund is to be invested by the Named Fiduciaryand shall direct the Trustee to segregate such portion of the Trust Fund into a separate account for

9

such Named Fiduciary. Each such separate account is referred to in this section as a Named Fiduciary Account.



(b) The Named Fiduciary shall be responsible for determining whether any investment direction it gives to theTrustee is in accordance with the terms of the documents and instruments governing the investment of the Named Fiduciary Account.

(c) All directions given by a Named Fiduciary to the Trustee shall be in writing, signed by the duly authorizedperson or persons; provided that the Trustee shall accept oral directions for the purchase or sale of securities which shall be confirmedby such authorized personnel in writing.

(d) In all events the Trustee is to retain physical custody of or title to all assets comprising a Named FiduciaryAccount.

(e) The Sponsor by written notice to the Named Fiduciary and the Trustee may terminate the authority of the NamedFiduciary as to all or part of the Named Fiduciary Account.

(f) Payment of the cost of the acquisition, sale, or exchange of any security for a Named Fiduciary Account shallbe charged to such Account.

(g) So long as the appointment of a Named Fiduciary is in effect, the Named Fiduciary shall have full power andauthority to direct the Trustee as to, and full responsibility for, investment of its Named Fiduciary Account and for the retention anddisposition of any assets in its Named Fiduciary Account, subject to the provisions of Section 5.1 hereof.

(h) The Named Fiduciary shall have the voting power with respect to all stocks and other securities in a NamedFiduciary Account.

(i) The Trustee shall make available to a Named Fiduciary copies of or extracts from such portions of its accounts,books, or records relating to the Named Fiduciary Account of such Named Fiduciary as the Trustee may deem necessary orappropriate in connection with the exercise of the Named Fiduciary�s function, or as the Sponsor may direct.

(j) All charges (other than those covered in subsection (f) above) against each Named Fiduciary Account shall bemade in such proportions as the Sponsor may direct from time to time.

(k) If the authority of a Named Fiduciary is terminated, unless and until a successor Named Fiduciary is appointedwith respect to such Named Fiduciary Account or the Named Fiduciary Account is merged into an Investment Account, a differentNamed Fiduciary Account, or an insurance company contract, the Sponsor shall be responsible to direct the Trustee as to theinvestment, management and disposition of the assets held in such Named Fiduciary Account. Until receipt of a written notice of the

10

termination of the authority of a Named Fiduciary, the Trustee shall be fully protected in assuming the continuing authority of suchNamed Fiduciary.

(l) Any direction by a Named Fiduciary shall be complete as to its terms, it being intended that the Trustee shallhave no obligation whatsoever to invest or otherwise manage any asset of a Named Fiduciary Account.

(m) The Trustee shall follow all proper directions of the Named Fiduciary which are made in accordance with theterms hereof.

(n) The Named Fiduciary shall determine in good faith the fair market value of assets held in a Named FiduciaryAccount no less often than annually, assuming an orderly liquidation at the time of such determination if the market value is notreadily available.

5.6 Notwithstanding Sections 5.1, 5.3, 5.4 and 5.5, any appointment by the Sponsor of an Investment Manager or a NamedFiduciary shall terminate upon the occurrence of a Change in Control, and neither the Sponsor, nor any successor to the Sponsor, shall thereafter



have any power to appoint an Investment Manager or a Named Fiduciary with respect to any portion of the assets of the Trust. At such time,the Trustee shall be the Investment Manager of the entire Trust Fund.

5.7 The Trustee may invest in shares of the Common Stock, $.01 par value, of Alliant Energy Corporation (�Company Stock�).All rights associated with shares of Company Stock that are held by the Trust shall be exercised by the Trustee, and shall in no event beexercisable by or rest with Plan participants.

5.8 The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets of equalfair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval orconsent of any person in a fiduciary capacity.

SECTION 6

DISPOSITION OF INCOME

During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

SECTION 7

ACCOUNTING BY TRUSTEE

The Trustee shall keep accurate and detailed records and accounts of all investments, receipts, and disbursements, and othertransactions hereunder, and all records, books, and accounts relating thereto shall be open to inspection by any person designated by the Sponsorat all reasonable times. As soon as reasonably practicable following the close of each annual accounting period of the Trust, and as soon asreasonably practicable after the resignation or

11

removal of a Trustee has become effective, the Trustee shall file with the Sponsor a written account setting forth all investments, receipts,disbursements, and other transactions effected by it during such year, or during the part of the year to the date the resignation or removal iseffective, as the case may be, and containing a description of all securities purchased and sold, the cost or net proceeds of sale, the securitiesand investments held at the end of such period, and the cost of each item thereof as carried on the books of the Trustee. Except as provided inSections 5.3(f), 5.4(j) and 5.5(n), the Trustee shall determine in good faith the fair market value of the Trust Fund no less often than annually,assuming an orderly liquidation at the time of such determination if no market value is readily available. If there is a disagreement betweenthe Trustee and anyone as to any act or transaction reported in an accounting, the Trustee shall have the right to have its account settled by acourt of competent jurisdiction. The Trustee shall make such other reports as may be agreed upon with the Sponsor. The Trustee shall retain itsrecords relating to the Trust as long as necessary for the proper administration thereof and at least for any period required by applicable law.

SECTION 8

RESPONSIBILITY OF TRUSTEE

8.1 The general responsibilities of the Trustee shall be as follows:

(a) The Trustee shall hold, administer, invest and reinvest, and disburse the Trust Fund in accordance with thepowers and subject to the restrictions stated herein.

(b) The Trustee shall disburse monies and other properties from the Trust Fund on direction of the Sponsor pursuantto the provisions of the Plans at the time or times to the payee or payees specified by the Sponsor in directions to the Trustee in suchform as the Trustee may reasonably require. The Trustee shall be under no liability for any distribution made by it pursuant to suchdirections and shall be under no duty to make inquiry as to whether any distribution made by it pursuant to any such direction ismade pursuant to the provisions of the Plans. The receipt of the payee shall constitute a full acquittance to the Trustee.



(c) The Trustee in its capacity as such shall have no responsibility or authority with respect to the operation andadministration of the Plans, and the rights, powers, and duties of the Trustee shall be governed solely by the terms of this Agreementwithout reference to the provisions of the Plans.

8.2 The Trustee shall have the right, power, and authority to take any action and to enter into and carry out every agreementwith respect to the Trust Fund that may be necessary or advisable to discharge its responsibilities hereunder, and without limiting the generalityof the foregoing and in addition to all other powers and authorities herein elsewhere specifically granted to the Trustee, the Trustee shall havethe following powers and authorities to be exercised in its absolute discretion:

(a) To hold securities and other properties in bearer form or in the name of a nominee or nominees withoutdisclosing any fiduciary relationship; provided, however,

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that on the books and records of the Trustee such securities and properties shall constantly be shown to be a part of the Trust Fund,and no such registration or holding by the Trustee shall relieve it from liability for the safe custody and proper disposition of suchsecurities and properties in accordance with the terms and provisions hereof.

(b) To receive, collect, and give receipts for every item of income or principal of the Trust Fund.

(c) To employ such agents, experts, counsel, and other persons (any of whom may also be employed by or representthe Company) deemed by the Trustee to be necessary or proper for the administration of the Trust to rely and act on informationand advice furnished by such agents, experts, counsel, and other persons; and to pay their reasonable expenses and compensationfor services to the Trust. Notwithstanding the foregoing, no person so serving may receive compensation from the Trust Fund forfiduciary services if such person, natural or otherwise, is affiliated with the Sponsor, and no person so serving who already receivesfull-time pay from the Sponsor or any affiliate thereof shall receive compensation from the Trust Fund, except for reimbursementof expenses properly and actually incurred. No such amounts may be charged to the Trust Fund unless the services provided areoutside the scope of the fee schedule described in Section 9 and the Trustee has given written notice to the Sponsor in advance of thecommencement of services and afforded the Sponsor the opportunity to challenge the necessity for such services or whether suchservices are already included in such fee schedule.

(d) To participate in and use the Federal Book-entry Account System (a service provided by the Federal ReserveBank for its member banks for deposit of Treasury securities), or to use the Depository Trust Company or other generally acceptedcentral depositories.

(e) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and allother instruments that may be necessary or appropriate to carry out the powers granted in this Section 4.2 to the Trustee.

(f) To bring action before any court of competent jurisdiction for instructions with respect to any matter pertainingto the interpretation of this Agreement or the administration of the Trust Fund.

(g) With respect to funds which are not able to be invested, to deposit such funds or any part thereof, eitherseparately or together with other trust funds under the control of the Trustee, in its own deposit department or to deposit the same inits name as Trustee in such other depositories as it may select, notwithstanding that the Trust may benefit directly or indirectly fromany float accrued from such funds.

In addition, the Trustee shall have the following powers and authorities to be exercised as directed by the Sponsor, an Investment Manager withrespect to its Investment Account or a Named Fiduciary with respect to its Named Fiduciary Account:

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(h) To sell, grant options to buy, transfer, assign, convey, exchange, mortgage, pledge, lease or otherwise dispose ofany of the properties comprising the Trust Fund.

(i) To manage, administer, operate, lease for any number of years, regardless of any restrictions on leases made byfiduciaries, develop, improve, repair, alter, demolish, mortgage, pledge, grant options with respect to, or otherwise deal with anyreal property or interest therein at any time held by it; and to cause to be formed a corporation or trust to hold title to any such realproperty with the aforesaid powers.

(j) To renew or extend or participate in the renewal or extension of any note, bond or other evidence ofindebtedness, or any other contract or lease, or to exchange the same, or to agree to a reduction in the rate of interest or rent thereonor to any other modification or change in the terms thereof, or of the security therefor, or any guaranty thereof; to waive any default,whether in the performance of any covenant or condition of any such note, bond or other evidence of indebtedness, or any othercontract or lease, or of the security therefor, and to carry the same past due or to enforce any such default; to exercise and enforceany and all rights to foreclose, to bid in property on foreclosure; to exercise and enforce in any action, suit, or proceeding at law orin equity any rights or remedies in respect to any such note, bond or other evidence of indebtedness, or any other contract or lease, orthe security therefor; to pay, compromise, and discharge with the funds of the Trust Fund any and all liens, charges, or encumbrancesupon the same, and to make, execute, and deliver any and all instruments, contracts, or agreements necessary or proper for theaccomplishment of any of the foregoing powers.

(k) To borrow such sums of money for the benefit of the Trust Fund; to secure any loan so made by pledge ormortgage of the trust property; and to renew existing loans.

(l) To use the assets of the Trust Fund, whether principal or income, for the purpose of improving, maintaining, orprotecting property acquired by the Trust Fund, and to pay, compromise, and discharge with the assets of the Trust Fund any and allliens, charges, or encumbrances at any time.

(m) To institute, prosecute, maintain, or defend any proceeding at law or in equity concerning the Trust Fund or theassets thereof, at the sole cost and expense of the Trust Fund, and to compromise, settle, and adjust any claims and liabilities assertedagainst or in favor of the Trust Fund or of the Trustee; but the Trustee shall be under no duty or obligation to institute, maintain, ordefend any action, suit, or other legal proceeding unless it shall have been indemnified to its satisfaction against any and all loss,cost, expense, and liability it may sustain or anticipate by reason thereof.

(n) To vote all stocks and to exercise all rights incident to the ownership of stocks, bonds, or other securities orproperties held in the Trust Fund and to issue proxies to vote such stocks; to enter into voting trusts; to give general or special proxiesor powers of attorney, with or without substitution; to sell or exercise any and all subscription rights and conversion privileges; tosell or retain any and all stock dividends;

14

to oppose, consent to, or join in any plan of reorganization, readjustment, merger, or consolidation in respect to any corporationwhose stocks, bonds, or other securities are a part of the Trust Fund, including becoming a member of any stockholders� orbondholders� committee; to accept and hold any new securities issued pursuant to any plan of reorganization, readjustment, merger,consolidation, or liquidation; to pay any assessments on stocks or securities or to relinquish the same; and to otherwise exercise anyand all rights and powers to deal in and with the securities and properties held in the Trust Fund in the same manner and to the sameextent as any individual owner and holder thereof might do.

(o) To make application for any contract issued by an insurance company to be purchased under a Plan, to acceptand hold any such contract, and to assign and deliver any such contract.



(p) To pay out of the Trust Fund all real and personal property taxes, income taxes, and other taxes of any and allkinds levied or assessed under existing or future laws against the Trust Fund.

(q) To pay any estate, inheritance, income, or other tax, charge, or assessment; and to require, before making anypayment, such release or other document from any taxing authority and such indemnity from the intended payee as the Trustee shalldeem necessary for its protection.

(r) To retain any funds or property subject to any dispute without liability for the payment of interest, and to declineto make payment or delivery thereof until final adjudication is made by a court of competent jurisdiction.

(s) To provide ancillary services to the Trust for not more than reasonable compensation.

8.3 The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly providedotherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name abeneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to asuccessor Trustee, or to loan to any person the proceeds of any borrowing against such policy.

8.4 Notwithstanding any powers granted to the Trustee pursuant to this Agreement or to applicable law, the Trustee shall nothave any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

8.5 The Trustee shall enjoy the following protections in connection with the performance of its duties herein.

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(a) The Trustee shall be fully protected in relying in good faith upon the existence of any fact or state of factsrepresented to it in writing by the Sponsor, or with respect to their applicable accounts, an Investment Manager or a NamedFiduciary.

(b) The Sponsor hereby indemnifies and holds the Trustee and its affiliates harmless, directly from the Sponsor�sown assets, from and against any and all claims, demands, losses, damages, expenses (including reasonable attorneys� fees andcosts), judgments and liabilities arising from, out of, or in connection with actions taken or omitted by the Trustee in accordancewith this Agreement, except to the extent that such claims, demands, losses, damages, expenses, judgments or liabilities result fromthe Trustee�s negligence or willful misconduct. This paragraph shall survive the termination of this Agreement.

(c) The Trustee shall be under no obligation to determine the amount of benefits to which participants or thebeneficiaries will be entitled or to keep any records of the respective interest of any individual participant or beneficiary of the Plans.The Trustee shall make payments to a participant or beneficiary upon written direction from the Sponsor. The Trustee shall have noliability to the Sponsor or any other person in making such payments in good faith. The Trustee shall not be required to determine ormake any investigation to determine the identity or mailing address of any person entitled to benefits and shall have discharged itsobligation in that respect when it shall have sent checks, securities and other papers by postage paid, first class mail to such personor persons and addresses as may be certified to it in writing by the Sponsor.

(d) The parties recognize that the Trustee does not guarantee the assets of the Trust Fund from loss or depreciation.

(e) The Trustee shall not be liable, responsible, or required to account to the Sponsor for the acts of any prior trusteeof this Trust Fund and shall be entitled to the indemnity set forth in Section 8.5 hereof therefor.

8.6 The Trustee hereby indemnifies and holds the Sponsor and its affiliates harmless, directly from the Trustee�s own assets,from and against any and all claims, demands, losses, damages, expenses (including reasonable attorneys� fees and costs), judgments and



liabilities arising from, out of, or in connection with the Trustee�s negligence or willful misconduct. This paragraph shall survive the terminationof this Agreement.

SECTION 9

COMPENSATION AND EXPENSES OF TRUSTEE

The Trustee shall be entitled to receive such reasonable compensation and reimbursement for its expenses as Trustee or in any othercapacity in connection with the Plans as reflected in Appendix B of this Agreement. Such compensation and reimbursement shall be paiddirectly by each Company in such proportions as the Sponsor shall determine, but if not so paid within ninety days after such fees are invoicedto the Sponsor shall be paid directly from the Trust Fund. Although not separately mentioned in Appendix B, reasonable compensation includesfloat

16

received from the use of funds by the Trustee or its affiliates which accrue on payments made from the Trust (such as distributions and expensepayments) and on contributions or other funds received too late in the day to be invested same-day for the Trust. Float on distribution paymentsbegins to accrue as of the check date, when funds are transferred to a separate check clearing account, and ends on the date the check clearsagainst this separate account or is returned to the Trust, if the Plan so provides. Periodic payments, such as pension checks, are generally mailedfive business days before the actual date on the check. In these instances, funds are not transferred to the separate check clearing account, andconsequently float does not begin to accrue, until the check date (i.e., five days from the mail date). Nonperiodic payments are generally mailedon the check date. Earnings on the float depend on the specific investment, the current rate, which is generally the Fed Funds rate or a moneymarket rate, and the period of time during which the funds are available.

SECTION 10

RESIGNATION OR REMOVAL OF TRUSTEE

10.1 The Trustee may resign at any time by written notice to the Sponsor, which shall be effective 60 days after receipt of suchnotice unless the Sponsor and the Trustee agree otherwise.

10.2 Prior to a Change in Control, the Trustee may be removed by the Sponsor on 30 days notice or upon shorter notice acceptedby the Trustee. Following a Change in Control, the Trustee may not be removed by the Sponsor unless 65% of all employees or formeremployees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans consent in writing to such removal.

10.3 Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently betransferred to the successor Trustee. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer,unless the Sponsor extends the time limit.

10.4 If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effectivedate of resignation or removal under Section 10.1 or 10.2 of this section. If no such appointment has been made, the Trustee may appoint asuccessor Trustee or it may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of theTrustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

SECTION 11

APPOINTMENT OF SUCCESSOR

11.1 If the Trustee resigns or is removed in accordance with Section 10.1 or 10.2 hereof, the Sponsor, or if a Change in Controlshall previously have occurred the Sponsor and at least 65% of all employees or former employees of the Company who are or may becomeentitled to the payment of benefits pursuant to the Plans, may appoint any third party, such as a



17

bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee uponresignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights andpowers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary orreasonably requested by the Sponsor or the successor Trustee to evidence the transfer.

11.2 The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existingTrust assets, subject to Sections 7 and 8 hereof.

SECTION 12

AMENDMENT OR TERMINATION

12.1 This Agreement may be amended by a written instrument executed by the Trustee and the Sponsor. Notwithstanding theforegoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable.

12.2 The Trust shall not terminate until the date on which all Plan participants and their beneficiaries are no longer entitled tobenefits pursuant to the terms of the Plans. In the event that the benefits for all participants and beneficiaries of one Plan have been paid,any excess assets shall remain in the applicable Plan Account but shall be available as necessary to fund other Plan Accounts in the prioritydetermined by the Company. Upon termination of the Trust any assets remaining in the Trust shall be returned to the Company sponsoring theapplicable Plan Account.

12.3 Notwithstanding the foregoing:

(a) This Agreement may not be amended by the Sponsor prior to a Change in Control without the written approvalof any Plan participant or beneficiary whose rights or protections under a Plan or this Agreement may be reduced, impaired, orotherwise adversely affected by the amendment.

(b) This Agreement may not be amended by the Sponsor following a Change in Control without the written approvalof all employees or former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to thePlans.

(c) The Sponsor may terminate this Trust prior to the date specified in Section 12.2 upon the written approval of allemployees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans.

SECTION 13

MISCELLANEOUS

13.1 Any provision of this Agreement prohibited by law shall be ineffective to the extent of any such prohibition, withoutinvalidating the remaining provisions hereof.

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13.2 Benefits payable to Plan participants and their beneficiaries under this Agreement may not be anticipated, assigned (eitherat law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.



13.3 This Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin, except to theextent the same are preempted by federal law.

13.4 This Agreement shall be binding upon, and shall inure to the benefit of, any successor (whether direct or indirect, bypurchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company. The Company (and anysuccessor to the Company) may not otherwise assign its obligations under this Agreement without the prior written approval of all employeesor former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to the Plans.

13.5 For the purposes of this Agreement:

(a) �Change in Control� means the occurrence of any one of the events set forth in the following paragraphs:

(i) any Person (other than (A) Alliant Energy Corporation or any Subsidiary, (B) a trustee or otherfiduciary holding securities under any employee benefit plan of Alliant Energy Corporation or any Subsidiary, (C) anunderwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directlyor indirectly, by the shareowners of Alliant Energy Corporation in substantially the same proportions as their ownershipof stock in Alliant Energy Corporation (�Excluded Persons�)) is or becomes the Beneficial Owner, directly or indirectly,of securities of Alliant Energy Corporation (not including in the securities beneficially owned by such Person anysecurities acquired directly from Alliant Energy Corporation or its affiliates after January 20, 1999, pursuant to expressauthorization by the Board that refers to this exception) representing 20% or more of either the then outstanding Sharesor the combined voting power of Alliant Energy Corporation�s then outstanding voting securities; or

(ii) the following individuals cease for any reason to constitute a majority of the number of Directorsof Alliant Energy Corporation then serving: (A) individuals who, on January 20, 1999, constituted the Board and (B)any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatenedelection contest, including but not limited to a consent solicitation, relating to the election of Directors of Alliant EnergyCorporation, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) whose appointmentor election by the Board or nomination for election by Alliant Energy Corporation�s shareowners was approved by avote of at least two-thirds of the Directors then still in office who either were Directors on January 20, 1999, or whoseappointment, election or nomination for election was previously so approved (collectively the �Continuing Directors�);provided, however, that individuals who are appointed to the Board pursuant to or in

19

accordance with the terms of an agreement relating to a merger, consolidation, or share exchange involving AlliantEnergy Corporation (or any Subsidiary) shall not be Continuing Directors for purposes of the Plan until after suchindividuals are first nominated for election by a vote of at least two-thirds of the then Continuing Directors and arethereafter elected as Directors by the shareowners of Alliant Energy Corporation at a meeting of shareowners heldfollowing consummation of such merger, consolidation or share exchange; and, provided further, that in the event thefailure of any such Persons appointed to the Board to be Continuing Directors results in a Change in Control, thesubsequent qualification of such Persons as Continuing Directors shall not alter the fact that a Change in Control occurred;or

(iii) Alliant Energy Corporation after January 20, 1999 consummates a merger, consolidation or shareexchange with any other corporation or issues voting securities in connection with a merger, consolidation or shareexchange involving Alliant Energy Corporation (or any Subsidiary), other than (A) a merger, consolidation or shareexchange which results in the voting securities of Alliant Energy Corporation outstanding immediately prior to suchmerger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the votingsecurities of Alliant Energy Corporation or such surviving entity or any parent thereof outstanding immediately aftersuch merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a



recapitalization of Alliant Energy Corporation (or similar transaction) in which no Person (other than an Excluded Person)is or becomes the Beneficial Owner, directly or indirectly, of securities of Alliant Energy Corporation (not including inthe securities beneficially owned by such Person any securities acquired directly from Alliant Energy Corporation or itsaffiliates after January 20, 1999, pursuant to express authorization by the Board that refers to this exception) representing20% or more of either the then outstanding Shares or the combined voting power of Alliant Energy Corporation�s thenoutstanding voting securities; or

(iv) the shareowners of Alliant Energy Corporation approve a plan of complete liquidation or dissolutionof Alliant Energy Corporation or Alliant Energy Corporation effects a sale or disposition of all or substantially all of itsassets (in one transaction or a series of related transactions within any period of 24 consecutive months), other than a saleor disposition by Alliant Energy Corporation of all or substantially all of Alliant Energy Corporation�s assets to an entityat least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially thesame proportions as their ownership of Alliant Energy Corporation immediately prior to such sale.

Notwithstanding the foregoing, no �Change in Control� shall be deemed to have occurred if there is consummated any transaction orseries of integrated transactions immediately following which the record holders of the Shares immediately prior to such transactionor series of transactions continue to own, directly or indirectly, in the same proportions as

20

their ownership in Alliant Energy Corporation, an entity that owns all or substantially all of the assets or voting securities of AlliantEnergy Corporation immediately following such transaction or series of transactions.

(b) �Beneficial Owner� shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules andRegulations under the Exchange Act; provided, however, that a Person shall not be deemed the Beneficial Owner of, or tobeneficially own, any security as a result of an agreement, arrangement or understanding to vote such security if the agreement,arrangement or understanding: (i) arises solely from a revocable proxy or consent given to such Person in response to a public proxyor consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and(ii) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report).

(c) �Board� or �Board of Directors� means the Board of Directors of Alliant Energy Corporation.

(d) �Director� means any individual who is a member of the Board of Directors of Alliant Energy Corporation.

(e) �Exchange Act� means the Securities Exchange Act of 1934, as amended from time to time, or any successorAct thereto.

(f) �Person� shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used inSections 13(d) and 14(d) thereof, including a �group� as defined in Section 13(d).

(g) �Potential Change in Control� means any action by the shareholders of the Alliant Energy Corporation, thePublic Service Commission of Wisconsin, the Iowa Utilities Board, the Federal Energy Regulatory Commission, or the Securitiesand Exchange Commission approving a transaction which, when accomplished, would result in a Change in Control.

(h) �Shares� means the shares of common stock of Alliant Energy Corporation.

(i) �Subsidiary� means any corporation, partnership, venture, or other entity in which Alliant Energy Corporation,directly or indirectly, has at least an 80% ownership interest.

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SECTION 14

EFFECTIVE DATE

The effective date of this Agreement shall be as provided in Section 1.1.

* * * * *

IN WITNESS WHEREOF, the Sponsor, AEC and the Trustee have caused this Agreement to be executed by their duly authorizedofficers and their respective corporate seals to be hereunto affixed as of the day and year first above written.

ALLIANT ENERGY CORPORATESERVICES, INC.

ByThomas L. HansonIts Vice President and Treasurer

ALLIANT ENERGY CORPORATION

ByThomas L. HansonIts Vice President and Treasurer

WELLS FARGO BANK, N.A.

ByLaurie Adams TempleIts Vice President

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APPENDIX A

PLANS

Plans Subject to Appendix B Fees:

Plan Account 1

1. Alliant Energy Excess Plan (Plan Sponsor: Sponsor)

2. Alliant Energy Corporate Services Supplemental Executive Retirement Plan (i.e., individual agreements labeled �SupplementalRetirement Agreement� which have been entered into with selected corporate officers) (Plan Sponsor: Sponsor)



Plan Account 2

3. Supplemental Retirement Agreements for Leo J. Crow, C.R.S. Anderson and Gordon F. Cooper (Plan Sponsor: IES)

4. IES Industries Inc. Amended and Restated Key Employee Deferred Compensation Agreement (Plan Sponsor: IES)

5. IES Industries, Inc. Director Retirement Plan (Plan Sponsor: IES)

6. IES SERP (Plan Sponsor: IES)

7. IES Excess Plan (Plan Sponsor: IES)

Plan Account 3

8. Wisconsin Power and Light Company Deferred Compensation Plan II (Plan Sponsor: WPL)

9. Wisconsin Power and Light Company Supplemental Retirement Plan (Plan Sponsor: WPL)

10. The Wisconsin Power and Light Company Pre-Retirement Survivor�s Income Supplemental Plan (Plan Sponsor: WPL)

11. Wisconsin Power and Light Company Executive Tenure Compensation Plan (Plan Sponsor: WPL)

12. Wisconsin Power and Light Company Deferred Compensation Plan I (Plan Sponsor: WPL)

Plans Subject to Separate �Bundled� Fees

Plan Account 4

13. Alliant Energy Key Employee Deferred Compensation Plan (Plan Sponsor: Sponsor)

Plan Account 5

14. Alliant Energy Corporation Deferred Compensation Plan for Directors (Plan Sponsor: AEC)

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APPENDIX B

Domestic Administration:*Tier 1 = 0 - $500 MM .0000375 on balanceTier 2 = $500 MM and over .0000325 on balance

Global Administration: .000325 on global assets

Account & Reporting:Investment manager and Plan accounts $1,200 per account

Transaction Charges:Domestic Depository Settlements $ 8 per transactionGlobal Settlements $12 per transactionMutual Fund Settlements $15 per transaction



Physical Settlements $75 per transactionFutures/Option Settlements $15 per transactionPrincipal Paydowns $ 5 per transactionMoney Transactions $10 per transaction

Benefit Payments:Periodic Check or ACH/Advice $ 1.50 per payment (RPP)Lump-Sum Payment $ 2.00 per payment (RPP)Manual Maintenance $ 6.75 per itemW-2, 1099R, 1099 MISC Issuance $ 2 per form

On-Line Reporting:Trust Portfolio Reporting includedTrust Information Delivery includedRetirement Plan Payment included

There is no administration fee or fund settlement transaction charge for assets held in a fund managed by the Trustee or an affiliate thereof. (Asan item of disclosure, the January 1, 2006 investment management fee within the Wells Fargo STIF fund is .0012 on the balance. This is theonly Wells Fargo fund contemplated to be used as of January 1, 2006. In the event that one or more additional Wells Fargo funds are utilized inthe future, this schedule does not require

_________________________*The Trust asset balance will be combined with the master retirement trust, Foundation, VEBAs, and other Non-Qualified (w/o Recordkeeping)for billing purposes. Unless otherwise determined by the Total Compensation Committee established by the Compensation and PersonnelCommittee of the Board of Directors of Alliant Energy Corporation, the Trust share of such fees will be determined pro rata, and within theTrust, each account�s share will also be determined pro rata.

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amendment because the internal fees generated in such funds are not items contemplated to be covered by this schedule.)

The schedule above reflects all fees for the services contemplated as of January 1, 2006 to be performed by the Trustee pursuant to theAgreement. For example, there is no charge for the collection of interest income and dividends or for the establishment of the trusts andaccounts. Likewise, all copying costs, first class postage, out-sourcing costs, and other expenses directly or indirectly related to the servicescontemplated in the schedule are included, as are web-based delivery of financials and web-based retirement plan payments. Fees outside ofthe scope of the schedule which would be separately assessed would be for services not contemplated as of January 1, 2006 to be provided byor through the Trustee or any affiliate such as investment guideline monitoring, performance measurement, analytics and attribution reporting;fees for such additional services will be negotiated at the time that the Sponsor requests such services to be performed.

Fees are calculated and charged on a quarterly basis, although the domestic and global administration and accounting and reporting fees in theschedule are the annual amount.

The Trustee has guaranteed a minimum service level in various areas of performance. If such service does not satisfy the guaranteed level, thefees under this Appendix shall be reduced as set forth below:

Service Component Standard Resolution

Timeliness of Information (M,Q) 8th business day * 1 credit per accountTimeliness of Information (A) 20th business day 1 credit per accountAccuracy of Information No revisions 1 credit per revisionTimeliness of checks/payments 48 hour turnaround ** 1 credit per late item



Accuracy of check/payments No revisions 1 credit per revisionService Responsiveness Same Day Response 1 credit per incidentIssue Resolution Set/Achieve Expectations 1 credit per incidentCEO availability 98% available 1 credit per event

* This excludes the first month after conversion, due to balancing to prior custodian.** Based on all directions being sent prior to cash movement deadlines.

Resolution of Service Quality Issues:

credits are used as an offset to Trustee/Custody fees as follows:

� 1 credit = $100� 5 credits = $500� 10 credits = $1000� more than 10 credits = 10% fee waiver for the period

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All performance standards are agreed to and enforced with the understanding that the Trustee has received all necessary information needed toperform tasks in the manner outlined in the standard. For example, a statement revision caused by revised information provided after the factby the customer or a third party would not result in a �credit� from the Trustee.

For purposes of the 10% fee waiver for more than 10 credits, the determination will be made based on all of the trusts/custody arrangementswhich the Trustee has with the Sponsor and its affiliates covered by similar service level guarantees.

The maximum of fee credits in any fee billing period will not exceed 10% of the fees for that billing period.

A securities lending program shall be in effect pursuant to separate written agreement, providing the Trustee or affiliates thereof 25% of the netearnings from each loan and the Trust Fund 75% of the net earnings for each loan.

The Trustee may charge the reasonable and customary charges of the Trustee for any properly settled transaction that results in an overdraft.

The Trustee guarantees the pricing under this Appendix B through December 31, 2010. Through that date, fees cannot be a reason for theTrustee to resign pursuant to Section 6.1.

Consistent with Section 8.1, this Appendix B may be amended by the written agreement of the Trustee and the Sponsor.

This Appendix B does not address the �bundled� fee arrangement for the Alliant Energy Key Employee Deferred Compensation Plan and theAlliant Energy Corporation Deferred Compensation Plan for Directors.

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Exhibit 10.26

SUPPLEMENTAL RETIREMENT PLAN AGREEMENT[Applicable to VPs Pre 1-1-02]

This Supplemental Retirement Plan (�SRP�) Agreement is made this ____ day of ____________, 2003, by and between________________________ (the �Officer�) and Alliant Energy Corporation (the �Company�).

W I T N E S S E T H:

WHEREAS, Alliant Energy wishes to provide supplemental retirement benefits to a select group of senior executive personnel,including the Officer, to ensure the overall effectiveness of the Company�s executive compensation program and that the Company will beable to attract, retain, and motivate qualified senior executive personnel;

WHEREAS, the Company and the Officer have heretofore entered into one or more agreements (the �Prior Agreements�)providing supplemental retirement, deferred compensation or similar benefits, which Prior Agreements are identified in Appendix A hereto;and

WHEREAS, the Company and the Officer wish to enter into this Agreement, which shall amend, restate, supersede and replaceany Prior Agreements;

NOW, THEREFORE, the parties agree as follows:

ARTICLE ISCOPE OF AGREEMENT

1.1 Effect on Prior Agreements. This Agreement shall supersede and replace the Prior Agreements, effective as of the dateof this Agreement, and the parties shall thereafter have no further rights or obligations under the Prior Agreements.

1.2 Effect on Change of Control Agreements. If the Officer is a party to an agreement which is binding on the Company andwhich takes effect in the event of a change in control, such agreement shall supersede and control over the provisions of this Agreement in theevent of any conflict between the two.

1.3 No Contract of Employment. This Agreement does not constitute an employment agreement between the Officer and theCompany. Nothing in this Agreement shall affect the Company�s right to terminate the Officer�s employment or position as an officer at anytime, with or without cause.

1.4 Effect on Other Benefits. Nothing in this Agreement shall modify, impair or otherwise affect the rights of the Officer toparticipate in or receive benefits under any other employee benefit plan of the Company, it being understood that the rights of the Officer toparticipate in or receive benefits under any such plan shall be determined in accordance with the provisions of such plan and shall not beaffected by the provisions of this Agreement.

ARTICLE IIDEFINITIONS

2.1 Beneficiary means the beneficiary or beneficiaries designated in writing by the Officer on the form provided in AppendixB or, in default of such designation or the failure of the designated beneficiaries to survive the Officer, the Officer�s estate.



2.2 Board of Directors means the Board of Directors of Alliant Energy Corporation or any committee of the Board which isdesignated by the Board of Directors, or permitted by the Bylaws of the Alliant Energy Corporation, to act on behalf of the Board of Directors.

2.3 Continuous Employment means the Officer�s last continuous period of employment with the Company immediatelypreceding the Officer�s retirement. If the Officer has been continuously employed by the Company since the merger of IES Industries Inc.,WPL Holdings, Inc. and Interstate Power Company, the Officer�s Continuous Employment shall also include his or her last continuous periodof employment with IES Industries Inc., WPL Holdings, Inc. or Interstate Power Company, immediately preceding the date of such merger. Ifthe Officer�s Supplemental Benefit is computed by using a Prior Employer Benefit as set forth in Paragraph 3.1, part or all of the Officer�sservice with such prior employer(s) shall be treated as Continuous Employment as determined by the Board of Directors.

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2.4 Dependent Child or Children means any child of the Officer who, on the date of any payment under this Agreement, is18 years of age or under, is 24 years of age or under and is a �student� as defined in Section 151(c)(4) of the Internal Revenue Code, or is a�substantially handicapped person.� The term �child� includes any naturally born or legally adopted child; provided, in the case of an adoptedchild, that the adoption became final prior to such child�s 18th birthday. The term �substantially handicapped person� includes any personwho has a �physical or mental impairment which substantially limits one or more major life activities,� as those terms are defined in 29 C.F.R.Section 32.3.

2.5 Disabled means the Officer has satisfied (and continues to satisfy) the requirements for receiving disability benefits underthe terms of the Company�s long-term disability plan.

2.6 Earnings means the Officer�s base salary, bonus and/or annual incentive pay for personal services rendered to theCompany. The Officer�s base salary shall be treated as Earnings in the period in which it would have been payable, regardless of any deferralelections. The Officer�s bonus and/or annual incentive pay shall be treated as Earnings in the calendar year in which it is earned, regardless ofwhen it is paid.

2.7 Final Average Earnings means the Officer�s average monthly Earnings for the three consecutive calendar years out ofthe Officer�s last ten calendar years of employment with the Company that yields the highest average.

2.8 Internal Revenue Code means the Internal Revenue Code of 1986, as amended.

2.9 Normal Retirement Date means the later of the Officer�s 62nd birthday or the date on which the Officer completes tenyears of Continuous Employment.

2.10 Pension Plan means any defined benefit pension plan of the Company or its subsidiaries which is qualified under Section401(a) of the Internal Revenue Code and from which the Officer is entitled to a benefit. Pension Plan also means the nonqualified AlliantEnergy Excess Retirement Plan from which the Officer may be entitled to a benefit.

2.11 Prior Employer Benefit means, as determined by the Board of Directors, part or all of the monthly amounts payable tothe Officer or the Officer�s Surviving Spouse from any of the Officer�s prior employers� qualified or non-qualified defined benefit pension orsimilar type of plans, which are attributable to the prior employers� contributions to such plans.

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2.12 Supplemental Benefit means the benefit described in Paragraph 3.1 and payable to the Officer pursuant to Articles III, IVor V.



2.13 Surviving Spouse means the individual, if any, who is legally married to the Officer at the time of the Officer�s death.

ARTICLE IIINORMAL RETIREMENT BENEFIT

3.1 Supplemental Benefit.

(a) Subject to the following provisions of this Article III, if the Officer remains a full-time employee and remains aCompany officer until his or her Normal Retirement Date, the Officer shall receive a Supplemental Benefit equal to 60% of the Officer�sFinal Average Earnings, reduced by the sum of:

(i) the monthly benefit payable to the Officer from the qualified Pension Plan;plus(ii) the monthly benefit payable to the Officer from the nonqualified Pension Plan;plus(iii) the monthly amount of the Officer�s Prior Employer Benefit.

The Supplemental Benefit shall be paid in (A) equal monthly installments, commencing on the first day of the month following the Officer�sretirement from the Company as both an officer and an employee and ending when 216 monthly payments have been made to the Officer, (B)a single lump sum, or (C) an annual installment option with installment payments for up to a maximum of ten years. The Officer must indicatethe desired form of payment by submitting a distribution election form to the Company at least 12 months before his or her retirement date(the most recent election on file 12 months prior to the retirement date being the �Valid Election�). As a transition exception, an election filedby August 31, 2003 will be a Valid Election with respect to a retirement date on or after January 1, 2004. If no Valid Election is on file, thedefault election is the monthly installment option described in (A) above.

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If the Officer elects an annual installment option as described in (C) above, the lump sum value determined under (B) above will be the initialaccount used to determine annual installment payments. This initial account will be credited interest in accordance with the Alliant EnergyKey Employee Deferred Compensation Plan�s (�KEDCP�) Interest Account crediting rates and administrative procedures. The lump sumpayment or the first annual installment payment shall be made within 60 days after the Officer�s retirement or within 60 days after the last dayof the calendar year in which the Officer retires, as elected by the Officer in the Valid Election. Each annual installment after the first shall bepaid within 31 days after the last day of the calendar year in which the previous installment was paid.

(b) For the purposes of Subparagraph (a), the amount of the Officer�s monthly benefit from the Pension Plan shallbe determined as follows:

(i) If the Officer receives a joint and survivor annuity from the Pension Plan and the Officer�sSurviving Spouse is the joint annuitant, the Officer�s monthly benefit from the Pension Plan shall be the monthlyamount payable to the Officer under such joint and survivor annuity.

(ii) If the Officer receives a single life annuity from the Pension Plan, the Officer�s monthly benefitfrom the Pension Plan shall be the monthly amount payable to the Officer under such single life annuity.

(iii) If the Officer receives any other form of payment from the Pension Plan, such other form of paymentshall be converted to an actuarially equivalent single life annuity, using the actuarial assumptions then in use for suchpurpose under the Pension Plan, and the Officer�s monthly benefit from the Pension Plan shall be the monthly amountthat would be payable to the Officer under such single life annuity.



(iv) If a portion of the Officer�s benefits under the Pension Plan has been awarded to an Alternate Payeepursuant to a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code, theOfficer�s monthly benefit from the Pension Plan shall be deemed to be the amount that would have been payable to theOfficer if no such order had been entered.

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(v) The Officer�s monthly benefit from the Pension Plan shall be determined as though it hadcommenced on the same date as the Officer�s Supplemental Benefit, regardless of when the Officer�s Pension Planbenefit actually commences.

(vi) Any increase in the monthly amount of the Officer�s Pension Plan benefit adopted after the initialcalculation of benefits hereunder shall correspondingly reduce the monthly amount of the Officer�s SupplementalBenefit pursuant to Paragraph 3.1(a)(A) unless the Board of Directors provides by resolution that the SupplementalBenefit shall not be so reduced. No adjustments shall be made to the lump sum benefit or the installment benefitspursuant to Paragraph 3.1(a)(B) or (C).

(c) For the purposes of Subparagraph (a), the monthly amount of the Officer�s Prior Employer Benefit shall bedetermined, and shall be included in the computation of the Supplemental Benefit, in the sole and absolute discretion of the Board ofDirectors.

(d) The lump sum payment amount provided under Paragraph 3.1(a) shall be determined by converting the monthlyinstallment benefit described in Paragraph 3.1(a) into an actuarially equivalent lump-sum value, using the SRP lump-sum discount rate, whichwill be based on the lessor of (i) the 12-month average of 10-year Treasury Yields (meaning Federal Reserve U.S. Treasury ten-year activelytraded securities) in effect as of the beginning of the calendar year in which the lump sum benefit is paid or (ii) the FAS interest rate in effectas of the beginning of the calendar year in which the lump sum benefit is paid. The Board of Directors, however, reserves the right to modifythe discount rate for eligible executives at its discretion, provided that the Board shall give 12 months� notice before increasing the discountrate (thereby giving Officers the opportunity to make new distribution elections should they so choose). The mortality table shall be the sametable as then in use for determining lump sums under the Alliant Energy Cash Balance Pension Plan.

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3.2 Officer��s Death After Retirement.

(a) If the Officer dies after receiving at least 144 monthly Supplemental Benefit payments pursuant to Paragraph3.1(a)(A), the Officer�s Supplemental Benefit shall terminate upon the Officer�s death (with the full monthly payment being made for themonth in which such death occurs), and the Company shall have no further obligation to make any payments under this Paragraph.

(b) If the Officer dies after the commencement of Supplemental Benefit payments pursuant to Paragraph 3.1(a)(A)but prior to receiving 144 monthly payments, the Officer�s Surviving Spouse (if any) shall continue to receive the amount of the monthlypayments paid to the Officer for the month prior to death until the date on which the Officer and such Surviving Spouse have received a totalof 144 monthly payments. If both the Officer and the Officer�s Surviving Spouse die before they have received a total of 144 monthlypayments, the amount of the monthly payments paid to the Officer for the month prior to death shall continue to be paid to the Officer�sDependent Children until a total of 144 monthly Supplemental Benefit payments have been made to the Officer, the Officer�s SurvivingSpouse, and the Officer�s Dependent Children. If a payment to Dependent Children is due on a date when there is more than one DependentChild, such payment shall be equally divided among those persons who qualify as Dependent Children on the date the payment is due.Payments under this Paragraph 3.2(b) shall be made only to the Officer�s Surviving Spouse and Dependent Children. If the Officer is



deceased and there are no individuals who qualify as the Officer�s Surviving Spouse or Dependent Children on the date a payment is due, theCompany shall have no further obligation to make payments.

(c) If the Officer dies after the commencement of Supplemental Benefit payments pursuant to Paragraph 3.1(a)(C)but prior to receiving the elected number of installment payments, the Officer�s Beneficiary shall continue to receive the unpaid installmentpayments which the Officer would have received if the Officer had not died.

(d) If the Officer retires from the Company eligible for a Supplemental Benefit pursuant to Paragraph 3.1 but diesprior to the commencement of such benefits, the benefits shall be paid in the form that would have been applicable for the Officer, pursuant toParagraph 3.2(b) if monthly installments under Paragraph 3.1(a)(A), pursuant to Paragraph 3.2(c) if annual installments under Paragraph3.1(a)(C), or to the Beneficiary if a lump sum under Paragraph 3.1(a)(B).

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ARTICLE IVEARLY RETIREMENT BENEFIT

4.1 Supplemental Benefit. If the Officer retires at or after age 55 but prior to his or her Normal Retirement Date with ten ormore years of Continuous Employment, the Officer shall receive the Supplemental Benefit described in Article III commencing on the firstday of the month following the Officer�s retirement from the Company as both an officer and an employee. If the Officer�s SupplementalBenefit begins prior to age 62, the monthly amount shall be reduced by one-quarter of one percent (.25%) for each month by which the date onwhich the Officer retires precedes his or her Normal Retirement Date. The reduction factors will be applied to the Officer�s SupplementalBenefit prior to any offsets described in Paragraphs 3.1(a)(i), 3.1(a)(ii) and 3.1(a)(iii).

4.2 Payment of Benefit. The amount payable under this Article IV shall be calculated and paid in the same manner, and shallbe subject to the same conditions and limitations, as the benefit described in Article III.

ARTICLE VDISABILITY BENEFIT

5.1 Supplemental Benefit. If the Officer becomes Disabled prior to his or her termination of employment with the Companyand continues to be Disabled until he or she would have been entitled to a Supplemental Benefit under Articles III or IV, the Officer shall beeligible to receive a Supplemental Benefit commencing on the first day of the month following the date on which the Officer ceases to beentitled to disability benefits under the Company�s long-term disability plan (such date hereinafter referred to as the �Cessation Date�). Theamount payable under this Article V shall be calculated and paid in the same manner, and shall be subject to the same conditions andlimitations, as the benefit described in Article III (if the Cessation Date occurs on or after the Officer�s Normal Retirement Date) or in ArticleIV (if the Cessation Date occurs prior to the Officer�s Normal Retirement Date but after the Officer�s eligibility for a Supplemental Benefitunder Article IV).

5.2 Cessation of Disability. If the Officer becomes Disabled while employed as a Company officer, but the CessationDate occurs prior to the date on which he or she would have been entitled to a Supplemental Benefit under Paragraph 5.1, the period duringwhich the Officer was Disabled shall be included in the Officer�s period of Continuous Employment if (and only if):

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(a) the Officer resumes full-time employment with the Company as a Company officer within 30 days after theCessation Date; and



(b) the Officer continues in such employment until he or she becomes entitled to a Supplemental Benefit underArticles III or IV.

ARTICLE VICERTAIN DEATH BENEFITS

6.1 Pre-retirement Death Benefit.

(a) If the Officer dies prior to termination of his or her employment with the Company, a death benefit shall bepayable equal to 60% of the Officer�s Final Average Earnings, reduced by the sum of:

(i) the monthly benefit that would have been payable to the Officer from the qualified Pension Plan hadhe retired on the day preceding his death;

plus

(ii) the monthly benefit that would have been payable to the Officer from the nonqualified Pension Planhad he retired on the day preceding his death;

plus

(iii) the monthly amount of the Officer�s Prior Employer Benefit.

The death benefit payable under this Article VI shall be paid in the form determined by the most recent election by the Officer pursuant toParagraph 3.1(a) at least 12 months before the Officer�s death; provided that such 12-month requirement shall not invalidate an election filedby August 31, 2003 with respect to the death of the Officer on or after January 1, 2004. Benefits shall commence within 60 days after theOfficer�s death and shall be subject to the same conditions and limitations as the applicable payment method described in Paragraph 3.2 in (A)equal monthly installments ending when 144 monthly payments have been made to the Officer�s Surviving Spouse, (B) a single lump sumpayment calculated pursuant to Paragraph 3.1(d) or (C) annual installments for a period up to ten years.

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(b) For the purposes of Subparagraph (a), the monthly amount of the Officer�s Prior Employer Benefit shall bedetermined, and shall be included in the computation of the Surviving Spouse�s death benefit, in the sole and absolute discretion of the Boardof Directors.

6.2 Post-retirement Death Benefit.

(a) If the Officer dies subsequent to the commencement of Supplemental Benefit payments under Articles III, IVor V, the Company shall pay a death benefit to the Beneficiary. Such benefit shall be in addition to the benefits paid under Articles III, IV orV; however, no death benefit shall be payable under this Paragraph if the Officer�s death causes a beneficiary or the estate of the Officer toreceive a death benefit under the disability premium waiver provision of the Company�s group life insurance plan, or if the Officer dies beforeretirement.

(b) The death benefit payable pursuant to this Paragraph shall be an amount equal to 100% of the Officer�s FinalAverage Earnings. The death benefit payable under this Paragraph shall be paid in a single sum, within 30 days after the date the Beneficiaryhas been identified.

ARTICLE VIITERMINATION OF EMPLOYMENT OR LOSS OF POSITION



7.1 Termination of Employment. If the Officer is discharged by the Company for any reason, or if the Officer�s employmentwith the Company terminates prior to the date the Officer becomes entitled to a Supplemental Benefit under Articles III or IV for any reasonother than the Officer�s death or disability, the Officer (and his or her Surviving Spouse, Dependent Children, or other beneficiaries) shallforfeit any and all rights to receive benefits under this Agreement.

7.2 Loss of Position as Officer. The Officer shall be eligible for benefits under this Agreement only while holding theposition of Company officer. Except as otherwise provided in Article V (relating to Disability), if the Officer ceases to hold such a positionprior to the Officer�s termination of employment, the Officer (and his or her Surviving Spouse, Dependent Children, or other beneficiaries)shall forfeit any and all rights to receive benefits under this Agreement unless the Officer retires under Article III or IV within 30 days afterthe loss of such position.

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ARTICLE VIIIFUNDING

8.1 Unsecured Obligation. The Company�s obligations under this Agreement are an unsecured promise to make benefitpayments in the future, and nothing herein shall be construed as giving the Officer or his or her beneficiaries any right, title, interest or claimin or to any specific asset, fund, reserve, account or property owned by the Company, or in which the Company has any right, title or interest,either now or in the future. The rights of the Officer and his or her beneficiaries to receive payments under this Agreement shall be solelythose of unsecured general creditors of the Company.

8.2 ��Rabbi�� Trust. This Agreement is intended to be unfunded for the purposes of the Internal Revenue Code and theEmployee Retirement Income Security Act of 1974, as amended. However, nothing in this Agreement shall preclude the Company fromestablishing a trust (of the type commonly known as a �rabbi trust�) to assist it in meeting its obligations under this Agreement. If a rabbi trustwas established with respect to the Officer�s Prior Agreements, this Agreement shall be substituted for the Prior Agreements for all purposesof such trust, and any reference in such trust to the Prior Agreements shall be deemed to be a reference to this Agreement.

ARTICLE IXADMINISTRATION

9.1 Administration and Interpretation. The Board of Directors has sole and exclusive discretion to interpret the provisionsof this Agreement, and any such interpretation shall be final and binding upon the Officer unless it is found by a court of competentjurisdiction to have been arbitrary and capricious. The Board of Directors may adopt such rules and regulations relating to the administrationof this Agreement as it may deem necessary or advisable.

9.2 Claims Procedure. If the Officer or the Officer�s beneficiary (hereinafter referred to as a �Claimant�) is denied anybenefit under this Agreement, he or she may file a claim with the Board of Directors. The Board of Directors shall notify the Claimant within90 days of its allowance or denial of the claim, unless the Claimant receives written notice from the Board of Directors prior to the end of such90 day period that special circumstances require an extension of the time for decision, which extension shall not exceed an additional 90 days.The notice of the Board of Directors� decision shall be in writing sent by mail to Claimant�s last known address and, if a denial of the claim,shall contain:

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(a) the specific reasons for the denial;



(b) specific references to pertinent provisions of this Agreement on which the denial is based; and

(c) if applicable, a description of any additional information or material necessary to perfect the claim, anexplanation of why such information or material is necessary and an explanation of the claim review procedure.

9.3 Review Procedure.

(a) A Claimant is entitled to request a review of any denial of his or her claim for a benefit. The request for reviewmust be submitted to the Board of Directors in writing within 60 days of mailing of the notice of the denial. Absent a request for review withinthe 60-day period, the claim will be deemed to have been conclusively denied.

(b) The review shall be conducted by the Board of Directors, which shall afford the Claimant a hearing and theopportunity to review all pertinent documents and submit issues and comments orally and in writing. The Board of Directors shall render adecision within 60 days after receipt of a request for a review; provided, that in special circumstances (such as the necessity of holding ahearing) the Board of Directors may extend the time for decision by not more than 60 days upon written notice to the Claimant. The Claimantshall receive written notice of the Board of Directors� decision, together with specific reasons for the decision and references to the pertinentprovisions of this Agreement, which form the basis for the decision.

ARTICLE XAMENDMENT AND TERMINATION

10.1 By the Parties. Except as provided in Paragraph 10.2, this Agreement may not be amended or terminated except by awritten instrument signed by both parties.

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10.2 By the Company. At any time prior to the Officer�s termination of employment with a right to receive benefit paymentsunder this Agreement, this Agreement may be terminated or amended by action of the Board of Directors in its sole and absolute discretion,without any notice to or the consent or approval of the Officer; provided, that:

(a) this Agreement may not be amended or terminated by the Board of Directors unless a similar amendment ortermination is made with respect to all similar agreements between the Company and its Officers; and

(b) this Agreement may not be amended or terminated in a manner that would reduce or impair the Officer�s rightto receive payment of his or her Accrued Benefit if the Officer subsequently retires under circumstances that would have entitledthe Officer to a benefit if this Agreement had not been amended or terminated. For the purposes of this Subparagraph (b), theOfficer�s �Accrued Benefit� is an amount equal to one-fifteenth of the Supplemental Benefit the Officer would have been entitledto receive at retirement if this Agreement had not been amended or terminated, multiplied by the Officer�s years of ContinuousEmployment (up to a maximum of 15 years) on the date the Agreement is amended or terminated

Subject to the foregoing, the right of the Board of Directors to amend or terminate this Agreement shall include the absolute discretion tomake any amendment prospective or retroactive in application.

ARTICLE XIRESTRICTIVE COVENANTS

11.1 Restrictions. Notwithstanding anything in this Agreement to the contrary, it is expressly agreed that all payments underthis Agreement shall terminate, and that the Company shall have no further obligation under this Agreement, upon any violation of theprovisions of Paragraphs 11.2 or 11.3. Payments pursuant to this Agreement are intended to serve as consideration for these restrictions. If the



Officer received payments pursuant to Paragraph 3.1(a)(B) or (C) and violates Paragraph 11.2 or 11.3, the Officer shall repay to the Companythe portion of the benefits previously received which would have been forfeited if the Officer had received payments pursuant to Paragraph3.1(a)(A).

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11.2 Covenant Not to Compete. The restrictions of this paragraph apply during the period ending on the second anniversary ofthe Officer�s termination of employment with the Company and within the geographic area served by any business of the Company in whichthe Officer was more than indirectly involved on behalf of the Company (for a utility business, its regulated service territory as authorized bythe appropriate state agencies regulating utilities with jurisdiction over the applicable business) (the �Company�s Operations�). The Officershall not accept employment with or become a consultant to, any business that is in competition with the Company�s Operations (i) in anycapacity where confidential information learned by the Officer during employment with the Company would reasonably be considered useful,or (ii) in any capacity where customer relationships or goodwill developed by the Officer or conferred by the Company on the Officer couldreasonably be considered useful. The Officer shall not become a partner or a shareholder in any business that is in competition with theCompany�s Operations, although the Officer may hold up to a five percent interest in any company that is traded on the New York StockExchange, American Stock Exchange or other national or over-the-counter exchange without violating the provisions of this Paragraph 11.2.The Officer shall terminate any such position within 30 days after notice from the Board of Directors of the violation of this provision. Thedetermination of the Board of Directors as to whether a business is in competition with the Company�s Operations and whether thecompetition is occurring in the geographic area designated above shall be controlling for purposes of this Agreement.

11.3 Confidentiality. During the Officer�s employment by the Company and for a period of two years thereafter, the Officershall hold in confidence and not directly or indirectly disclose or use or copy or make lists of any confidential information or proprietary dataof the Company (including that of the Company�s affiliates) under any circumstances where such information or data is likely to be used inthe geographic area subject to Paragraph 11.2, except to the extent authorized in writing by the Board of Directors or required by any court oradministrative agency, other than to an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate inconnection with the performance by the Officer of duties as an employee of the Company. Confidential information shall not include anyinformation known generally to the public or any information of a type not otherwise considered confidential by persons engaged in the samebusiness or a business similar to that of the Company. All records, files, documents and materials, or copies thereof, relating to the business ofthe Company which the Officer shall prepare, or use, or come into contact with, shall be and remain the sole property of the Company andshall be promptly returned to the Company upon termination of employment with the Company.

14

11.4 Reasonableness of Restrictions. The Officer agrees that the restrictions set forth in this Article XI including, but notlimited to, the time period and the geographical area of such restrictions are fair and reasonable and are reasonably required for the protectionof the interests of the Company and its affiliated companies. In the event that, notwithstanding the foregoing, any of the provisions of thisArticle XI shall be held to be invalid or unenforceable, the remaining provisions thereof shall nevertheless continue to be valid andenforceable as though the invalid or unenforceable parts had not been included. In the event that any provision of this Article XI relating to thetime period and/or the areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areassuch court deems reasonable and enforceable, the time period and/or areas of restriction deemed reasonable and enforceable by said court shallbecome and thereafter be the maximum time period and/or areas.

ARTICLE XIIGENERAL PROVISIONS

12.1 Assignability of Benefits. Neither the Officer nor his or her beneficiaries shall have the power to transfer, assign,anticipate, mortgage or otherwise encumber any right to receive a payment in advance of such payment, and any attempted transfer,



assignment, anticipation, mortgage or encumbrance shall be void. No payment shall be subject to seizure for payment of public or privatedebts, judgments, alimony or separate maintenance, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

12.2 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State ofWisconsin, except to the extent the same are superseded by applicable federal law.

12.3 Tax Withholding. The Company shall withhold all applicable income and other taxes required on all payments under thisAgreement.

12.4 Counterparts. This Agreement may be signed in counterparts, which together shall constitute written evidence of thecomplete agreement of the parties.

12.5 Headings. The headings in this Agreement are for convenience only and shall not be used to interpret or construe itsprovisions.

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IN WITNESS WHEREOF, the parties have hereto set their respective hands on the day and year first above written.

Officer

By


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SUPPLEMENTAL RETIREMENT PLAN AGREEMENTAPPENDIX A

Prior Agreements:Original Agreement dated ________________________.

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SUPPLEMENTAL RETIREMENT PLAN AGREEMENTBENEFICIARY DESIGNATION

APPENDIX B

Officer Name:(Please Print)



In the event of my death, the following person(s) is (are) to receive any benefits payable to my Beneficiary under the Alliant EnergyCorporation Supplemental Retirement Agreement.

Note: If more than one primary beneficiary is indicated, the benefits will be split among them equally. If you desire to provide for adistribution of benefits among primary beneficiaries on other than an equal basis, please attach a sheet explaining the desired distribution infull detail. If the primary beneficiary(ies) is (are) no longer living, the secondary beneficiary(ies) will receive the benefits, in a similar manneras described above for the primary beneficiary(ies).

PRIMARY BENEFICIARY

Last Name First Name M.I. Relationship

Street Address City State Zip Code

If a trust or other arrangement is the designated beneficiary, include name, address and date of arrangement below:

Name Address Date

SECONDARY BENEFICIARIES





For additional beneficiaries, check here and attach additional sheet of paper.

The beneficiary designation takes effect in accordance with the provisions of the Plan. I reserve the right to rescind or change beneficiarydesignations at any time prior to my death.

Received by Alliant Energy Corporation

Date Officer Signature Date By

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Exhibit 10.31

SUMMARY OF 2006 MANAGEMENT INCENTIVE COMPENSATION PLAN

The Management Incentive Compensation Plan (MICP) provides eligible employees with a cash bonus if corporate and individual goals aremet. This plan gives employees a personal stake in the company and the opportunity to share in its success.

The key principles of the 2006 MICP are:�� Corporate financial performance determines a total finite pool of dollars available to spend on incentives

�� Leader judgment and discretion are a major aspect of determining payout amounts

�� The company must differentiate pay by performance

�� Individual performance will be evaluated both on results and how those results are achieved, through a performance appraisal process

�� A bias toward individual rather than group accountability must be created

Alliant Energy Corporate Performance: Corporate performance is the foundation for incentive compensation. The table below outlines the2006 goals against which corporate performance will be measured and the funding associated with each level of achievement.

2006 CORPORATE PERFORMANCE MEASURESFor purposes of Determining the Short-Term Incentive Pool

(1) Earnings Per Share (EPS) Cash Flow

Level Funding Level Funding

Maximum 150% Maximum 150%

Target 100% Target 100%

(2) Threshold 20% Threshold 20%

Weighting of EPS in Weighting of Cash Flow infinal Corporate Performance final Corporate Performance

85% + 15%

(1) Earnings per share (EPS) and cash flow amounts used for purposes of determining short-term incentive pool will be based onutility earnings only

(2) If the Threshold EPS level is not met, there will be no payout for the 2006 plan year = TRIGGER

MICP Target Incentives: Incentive rewards are considered �at risk� pay. The target incentive percentage assigned to participant groups isbased on competitive market research and internal equity. Achievement of the target level goals and objectives may result in apayout of 100% of the incentive opportunity. However, a participant�s final award may range anywhere from 0 to 200% of thattarget. Incentive opportunity is expressed as a percentage of eligible earnings for the plan year.

Target Incentive

Opportunity



Participant Group (as % of eligible earnings)

Chairman, President and Chief Executive Officer 90%

Senior Executive Vice President and Chief Financial Officer 65%

Executive Vice President 50%

Senior Vice President 40%

Vice Presidents 30%-35%*

Managing Director Level Positions 25%

Director, General Manager and Plant Manager Level Positions 20%

* 2006 MICP target for Vice Presidents is either 30% or 35%, depending on the specific position

Determining the Corporate Pool: Creation of the corporate pool is formulaic. At year-end, the corporate score (based on EPS and cash flowresults noted above) will be applied to all individuals� original target amounts to yield a corporate-adjusted target incentive amountfor each person. The sum of those individual corporate-adjusted target amounts yields a given department�s �contribution� to thetotal pool. The roll-up of all departmental and group pools yields the overall corporate pool, which is the finite amount of dollarsthat is subsequently re-allocated as incentive awards.

Re-Allocating Dollars Based on Performance: Once the corporate pool of dollars has been determined, each group will be allocated a setamount of dollars based on performance relative to their formulaic contribution. Groups that perform well against their goals will beallocated more than their contribution to the total pool; groups that perform below target will be allocated less than theircontribution. This re-allocation between groups is based on CEO discretion.

Individual Award Determination: All employees have performance goals, to be written as part of the formal performance appraisal process.For the company�s executive officers named above, the bonus will be based on achievement against the following performancegoals: (a) financial goals consisting of achievement of specified levels of one or more of EPS, cash flow, rates of return, operationand maintenance and/or capital spending; (b) certain operational and strategic goals; (c) certain goals relating to environmental,health and safety, and diversity matters; and (d) certain goals relating to leadership tasks. At year-end, each leader will evaluate his/her respective employees� performance against those goals � judging both results and behaviors � and that evaluation will yield arecommended MICP payout relative to target.



Exhibit 12.1

ALLIANT ENERGY CORPORATION

RATIO OF EARNINGS TO FIXED CHARGES

Years Ended December 31,

2005* 2004 2003 2002 2001

(dollars in millions)EARNINGS:Income from continuing operations $56.4 $218.4 $151.7 $85.0 $123.5Income tax expense (benefit) (52.9) 91.2 75.6 48.9 56.0

Income from continuing operations before income taxes 3.5 309.6 227.3 133.9 179.5

Fixed charges as defined 226.7 238.8 247.1 207.9 203.9

Adjustment for undistributed equity earnings (41.7) (21.0) (18.4) (3.8) (8.8)

Less:Interest capitalized 3.4 5.4 - - -Preferred dividend requirements of subsidiaries (pre-tax basis) ** 5.5 25.9 24.5 9.5 9.6

Total earnings as defined $179.6 $496.1 $431.5 $328.5 $365.0

FIXED CHARGES:Interest expense $175.8 $176.9 $205.1 $179.6 $177.6Interest capitalized 3.4 5.4 - - -Estimated interest component of rent expense 42.0 30.6 17.5 18.8 16.7Preferred dividend requirements of subsidiaries (pre-tax basis) ** 5.5 25.9 24.5 9.5 9.6

Total fixed charges as defined $226.7 $238.8 $247.1 $207.9 $203.9

Ratio of Earnings to Fixed Charges (Unaudited) *** 0.79 2.08 1.75 1.58 1.79

*In 2005, earnings as defined were inadequate to cover fixed charges as defined by $47.1 million.

**Preferred dividend requirements of subsidiaries (pre-tax basis) are computed by dividing the preferred dividend requirements of subsidiariesby one hundred percent minus the annual effective income tax rate.

***The ratio calculation in the above table relates to Alliant Energy Corporation's (Alliant Energy's) continuing operations. Refer to Note 16of Alliant Energy's "Notes to Consolidated Financial Statements" in Alliant Energy's Form 10-K for the annual period ended December 31,2005 for information related to Alliant Energy's discontinued operations.



Exhibit 12.2

INTERSTATE POWER AND LIGHT COMPANY

RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGESAND PREFERRED DIVIDEND REQUIREMENTS


2005 2004 2003 2002 2001

(dollars in millions)EARNINGS:Net income $165.1 $125.7 $100.7 $90.9 $98.1Income taxes 80.8 61.7 71.3 62.3 53.0

Income before income taxes 245.9 187.4 172.0 153.2 151.1



FIXED CHARGES:Interest expense $67.7 $67.9 $65.4 $63.7 $64.6Estimated interest component of rent expense 4.8 4.4 4.0 4.4 5.0


Ratio of Earnings to Fixed Charges (Unaudited) 4.39 3.59 3.48 3.25 3.17

Preferred dividend requirements (pre-tax basis) * $22.9 $23.0 $23.2 $4.9 $5.2

Fixed charges and preferred dividend requirements $95.4 $95.3 $92.6 $73.0 $74.8

Ratio of Earnings to Combined Fixed Charges andPreferred Dividend Requirements (Unaudited) 3.34 2.73 2.61 3.03 2.95

* Preferred dividend requirements (pre-tax basis) are computed by dividing the preferred dividend requirements by one hundred percent minusthe annual effective income tax rate.



Exhibit 12.3

WISCONSIN POWER AND LIGHT COMPANY

RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGESAND PREFERRED DIVIDEND REQUIREMENTS


2005 2004 2003 2002 2001

(dollars in millions)EARNINGS:Net income $105.1 $113.7 $114.9 $80.9 $73.5Income taxes 60.9 66.3 65.8 44.7 41.2

Income before income taxes 166.0 180.0 180.7 125.6 114.7


Adjustment for undistributed equity earnings (1.6) (4.5) (6.7) (3.8) (7.1)


FIXED CHARGES :Interest expense $40.4 $33.5 $37.9 $40.2 $43.5Estimated interest component of rent expense 33.5 23.1 9.8 9.0 8.1


Ratio of Earnings to Fixed Charges (Unaudited) 3.22 4.10 4.65 3.48 3.09

Preferred dividend requirements (pre-tax basis) * $5.2 $5.2 $5.2 $5.1 $5.1

Fixed charges and preferred dividend requirements $79.1 $61.8 $52.9 $54.3 $56.7

Ratio of Earnings to Combined Fixed Charges andPreferred Dividend Requirements (Unaudited) 3.01 3.76 4.19 3.15 2.81

* Preferred dividend requirements (pre-tax basis) are computed by dividing the preferred dividend requirements by one hundred percent minusthe annual effective income tax rate.



EXHIBIT 21

ALLIANT ENERGY CORPORATIONSUBSIDIARIES OF THE REGISTRANT

The following are deemed to be significant subsidiaries of Alliant Energy Corporation as of Dec. 31, 2005:

Name of Subsidiary State or Country of Incorporation

Interstate Power and Light Company Iowa

Wisconsin Power and Light Company Wisconsin

Alliant Energy Resources, Inc. Wisconsin

Alliant Energy International, Inc. Iowa

Alliant Energy Holdings do Brasil Limitada Brazil

WISCONSIN POWER AND LIGHT COMPANYSUBSIDIARIES OF THE REGISTRANT

The following are deemed to be significant subsidiaries of Wisconsin Power and Light Company as of Dec. 31, 2005:

Name of Subsidiary State of Incorporation

WPL Transco LLC Wisconsin



EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-117654, 333-88304, 333-51126, 333-41485, and 333-92783on Form S-8 and Registration Statement Nos. 333-114361 and 333-114062 on Form S-3 of our reports dated March 1, 2006, relating to thefinancial statements and financial statement schedule of Alliant Energy Corporation and management�s report on the effectiveness of internalcontrol over financial reporting, appearing in this Annual Report on Form 10-K of Alliant Energy Corporation for the year ended December31, 2005.





EXHIBIT 23.2


We consent to the incorporation by reference in Registration Statement No. 333-114065 on Form S-3 of our report dated March 1, 2006,relating to the financial statements and financial statement schedule of Interstate Power and Light Company, appearing in this Annual Reporton Form 10-K of Interstate Power and Light Company for the year ended December 31, 2005.





EXHIBIT 23.3


We consent to the incorporation by reference in Registration Statement No. 333-114063 on Form S-3 of our report dated March 1, 2006,relating to the financial statements and financial statement schedule of Wisconsin Power and Light Company, appearing in this Annual Reporton Form 10-K of Wisconsin Power and Light Company for the year ended December 31, 2005.





Exhibit 31.1Certification of the Chairman, President and Chief Executive Officer

of Alliant Energy Corporation

I, William D. Harvey, certify that:

1. I have reviewed this annual report on Form 10-K of Alliant Energy Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant�s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant�s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant�s internal control over financial reporting that occurred during the registrant�smost recent fiscal quarter (the registrant�s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant�s internal control over financial reporting; and

5. The registrant�s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant�s auditors and the audit committee of the registrant�s board of directors (or persons performing the equivalentfunctions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant�s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant�sinternal control over financial reporting.

Date: March 1, 2006

/s/ William D. HarveyWilliam D. Harvey

Chairman, President and



Chief Executive Officer



Exhibit 31.2Certification of the Senior Executive Vice President and Chief Financial Officer

of Alliant Energy Corporation

I, Eliot G. Protsch, certify that:

1. I have reviewed this annual report on Form 10-K of Alliant Energy Corporation;



4. The registrant�s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have:


b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant�s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant�s internal control over financial reporting that occurred during the registrant�smost recent fiscal quarter (the registrant�s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant�s internal control over financial reporting; and




Date: March 1, 2006

/s/ Eliot G. ProtschEliot G. Protsch

Senior Executive Vice President



and Chief Financial Officer



Exhibit 31.3Certification of the Chairman and Chief Executive Officer

of Interstate Power and Light Company


1. I have reviewed this annual report on Form 10-K of Interstate Power and Light Company;



4. The registrant�s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


b) Evaluated the effectiveness of the registrant�s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

c) Disclosed in this report any change in the registrant�s internal control over financial reporting that occurred during the registrant�smost recent fiscal quarter (the registrant�s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant�s internal control over financial reporting; and




Date: March 1, 2006


Chairman andChief Executive Officer



Exhibit 31.4Certification of the Chief Financial Officer

of Interstate Power and Light Company


1. I have reviewed this annual report on Form 10-K of Interstate Power and Light Company;










Date: March 1, 2006


Chief Financial Officer



Exhibit 31.5Certification of the Chairman and Chief Executive Officer

of Wisconsin Power and Light Company


1. I have reviewed this annual report on Form 10-K of Wisconsin Power and Light Company;










Date: March 1, 2006


Chairman andChief Executive Officer



Exhibit 31.6Certification of the Chief Financial Officerof Wisconsin Power and Light Company


1. I have reviewed this annual report on Form 10-K of Wisconsin Power and Light Company;










Date: March 1, 2006


Chief Financial Officer



Exhibit 32.1

Written Statement of the Chief Executive Officer and Chief Financial OfficerPursuant to 18 U.S.C. §1350

Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, theundersigned Chief Executive Officer and Chief Financial Officer of Alliant Energy Corporation (the �Company�), hereby certify, based onour knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 (the �Report�) fully complieswith the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, inall material respects, the financial condition and results of operations of the Company.

/s/ William D. HarveyWilliam D. HarveyChairman, President and Chief Executive Officer

/s/ Eliot G. ProtschEliot G. ProtschSenior Executive Vice President and Chief Financial Officer

March 1, 2006



Exhibit 32.2


Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, theundersigned Chief Executive Officer and Chief Financial Officer of Interstate Power and Light Company (the �Company�), hereby certify,based on our knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 (the �Report�) fullycomplies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairlypresents, in all material respects, the financial condition and results of operations of the Company.

/s/ William D. HarveyWilliam D. HarveyChairman and Chief Executive Officer

/s/ Eliot G. ProtschEliot G. ProtschChief Financial Officer

March 1, 2006



Exhibit 32.3


Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, theundersigned Chief Executive Officer and Chief Financial Officer of Wisconsin Power and Light Company (the �Company�), hereby certify,based on our knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 (the �Report�) fullycomplies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairlypresents, in all material respects, the financial condition and results of operations of the Company.

/s/ William D. HarveyWilliam D. HarveyChairman and Chief Executive Officer

/s/ Eliot G. ProtschEliot G. ProtschChief Financial Officer

March 1, 2006



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